Ford Earnings Plunge 56%

Ford Motor Co.’s net income fell to $1 billion in the third quarter from $2.2 billion in the same period last year. The company’s unit sales shrank 4% globally, and revenue dropped 6% to $35.9 billion.

Results were in line with the company’s warning in July of a “much weaker” second half. Ford blames the third-quarter profit decline on higher costs in North America and an 11% drop to 687,000 wholesales in the region. Revenue fell 8% to $21.8 billion.

The company notes that a massive door-latch recall has added $640 million in costs this year. Launching the all-new, aluminum-intensive heavy-duty F-Series pickup truck also added cost.

Ford’s third-quarter operating margin in North America plunged to 5.8% from 12.3% a year earlier. The company’s global operating margin for automotive operations shrank to 3.3% from 7.7% in the same quarter of 2015.

Asia Pacific was a bright spot. Wholesales in July-September jumped 30% to 398,000 vehicles, and revenue climbed to $3.1 billion from $2.7 billion. Pretax profit climbed 20% to a record $131 million on a $320 million contribution from the company’s joint ventures in China.

In Europe, third-quarter unit sales fell 15% to 320,000 vehicles, and revenue dropped 10% to $6.3 billion. But pretax profit rose to $138 million, its best result for the period in eight years.

Conditions continued to worsen in South America. Sales there fell 13% to 89,000 vehicles, and revenue shrank 16% to $1.3 billion. Ford’s pretax loss there widened to $295 million from $163 million in the same period last year.