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Ford Motor Co. (F - Analyst Report) posted a 12.5% rise in earnings per share of 45 cents in the third quarter of 2013 from 40 cents in the same quarter of 2012 (all excluding special items). With this, the company has beaten the Zacks Consensus Estimate of 38 cents.

Pre-tax income rose 19.7% to $2.6 billion from $2.2 billion in the third quarter of 2012. Net income declined to $1.3 billion or 31 cents per share from $1.6 billion or 41 cents a year ago. The decline was due to pre-tax special item charges of $498 million.

The business in most geographic regions improved during the quarter. The company’s profit, excluding the income from North America, increased, which is a first since the second quarter of 2011. Ford’s businesses in North America, Asia-Pacific & Africa and South America reported profits. Although the European business reported a loss, it still showed improvement over the prior-year quarter. The improvement was due to its One Ford plan that seems to be bearing fruits.

Revenues in the quarter grew 12.2% to $36 billion, exceeding the Zacks Consensus Estimate of $33.8 billion. The improvement was attributable to increased wholesale volumes in automotive business and higher market share in all the regions.

Ford Automotive

Revenues in the segment grew 12.3% to $33.9 billion on the back of a 16.3% rise in wholesale volumes to 1.5 million units, reflecting improved market share, higher industry volumes in all regions except South America, favorable changes in dealer stocks, as well as net pricing gains in all the regions. Pre-tax profit soared 25.4% to $2.2 billion from $1.8 billion a year ago.

In North America, revenues went up 11.3% to $21.7 billion on a 12.9% rise in wholesale volumes to 744 thousand units. The company benefited from improved market share, higher industry volumes and favorable changes in dealer stocks.

However, pre-tax profit was down 0.9% to $2.3 billion. This is the sixth time in the past seven quarters that the North American business achieved a pre-tax profit of more than $2 billion. Results were driven by higher industry sales and healthy full-size pickup sales in the region, a strong product portfolio, market share gains in the U.S., continued discipline in matching production to real demand and a lean cost structure.

Ford continues to expect higher pre-tax profit compared with 2012 and operating margin of 10% in the region.

In South America, revenues escalated 21.7% to $2.8 billion due to increased volumes and net pricing gains, offset partially by unfavorable exchange. Wholesale volumes rose 22.2% to 143 thousand units, reflecting favorable changes in dealer stocks and higher market share.

Pre-tax profit jumped to $159 million from a meager $9 million in the third quarter of 2012. Ford now expects breakeven to profitable results in the region in 2013, compared with the previous guidance of breakeven results due to a challenging economic environment.

In Europe, revenues inched up 12.1% to $6.5 billion as wholesale volumes increased 5.1% to 310 thousand units. The increase in volumes was attributable to higher industry volumes, lower dealer stock reductions and higher market share.

The region had a narrower pre-tax loss of $228 million compared with $468 million a year ago. The improvement in volumes was owing to various favorable factors, which were offset partially by higher restructuring costs. For full year 2013, Ford expects lower pre-tax loss than 2012 in the region.

In the Asia-Pacific & Africa regions, revenues grew 11.5% to $2.9 billion on an impressive 34.9% rise in wholesale volumes to 348 thousand units. The increased volumes reflected a 3.7% gain in market share, driven mainly by China, along with increase in industry volumes and favorable changes in dealer stock. In China, Ford’s market share improved to 4.3%, fueled by strong sales of the Focus, Kuga and EcoSport SUV.

The region reported an operating profit of $126 million, rising from $45 million in the year-ago quarter. The improvement was due to various positive factors, which offset the increase in costs due to investments. For full year 2013, Ford expects the Asia Pacific and Africa regions to be profitable.

Ford’s Other Automotive – consisting primarily of interest and financing-related costs – revealed a pre-tax loss of $139 million, in line with the year-ago figure. The loss was attributable to net interest expense, offset partially by a favorable fair market value adjustment on the company’s investment in Mazda Motor. For 2013, Ford expects net interest expense to be at the lower end of its prior guidance of $800–$850 million.

Financial Services

Revenues in the segment rose 10.5% to $2.1 billion. Ford Credit reported an 8.7% rise in pre-tax profit to $427 million on improved volumes in North America.

Ford Credit continues to expect pre-tax profit to be in line with the 2012 figure. However, it expects to pay distributions to its parent of about $400 million, double of the previous guidance of $200 million. It also anticipates year-end managed receivables of $100 billion, within the prior range of $97 billion to $102 billion.

Financial Position

Ford had cash and marketable securities of $26.1 billion as of Sep 30, 2013, an improvement of nearly $2.0 billion from $24.1 billion as of Sep 30, 2012. However, Automotive debt rose to $15.8 billion as of Sep 30, 2013 from $14.2 billion as of Sep 30, 2012.

In the first nine months of 2013, the company’s cash flow from continuing operations increased to $6.4 billion from $4.1 million a year ago. Operating-related cash flows more than doubled to $1.6 billion from $0.7 billion a year ago. Capital expenditures increased to $4.6 billion from $3.6 billion in the same period a year ago.

2013 Guidance

In 2013, Ford expects industry volume (including medium and heavy trucks) of 15.0–16.0 million units in the U.S.; 13.0–14.0 million units in the 19 European markets; and 19.5–21.5 million units in China.

The company expects its 2013 market share in the U.S. to be higher than 2012 (15.2%), Europe to be almost the same as in 2012 (7.9%), and China to be higher than 2012 (3.2%).

Ford provided a better outlook on its profits and margins. During the year, Ford anticipates total company pre-tax profit to be higher than 2012 ($8.0 billion) compared with the prior guidance of being in line or higher than 2012. It forecasts Automotive operating margin to be higher than 2012 (5.3%) compared with the prior guidance to be on par with 2012.

Moreover, the company expects Automotive operating related cash flows to be substantially higher than 2012 ($3.4 billion).

Other Stocks to Consider

Ford currently carries a Zacks Rank #2 (Buy). Other major automobile stocks worth considering are Daimler AG (DDAIF), Honda Motor Co., Ltd. (HMC - Analyst Report) and Fuji Heavy Industries Ltd. (FUJHY). While Daimler is a Zacks Rank #1 (Strong Buy) stock, the other two carry a Zacks Rank #2 (Buy).

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