Ford Motor Co. on Wednesday said its third-quarter profit rose 62%, beating estimates and setting a record for the period, in a performance analysts say the auto maker may be hard-pressed to repeat amid an onslaught of competition for its popular sport-utility vehicles.
The world's second-largest auto maker said net income rose to $1.13 billion, or 90 cents a fully diluted share, from $694 million, or 53 cents, before special items in the year-earlier period. Ford was expected to earn 84 cents a share, according to analysts' estimates.
Ford's increase was fueled in part by strong U.S. demand for its high-profit Expeditions and Navigators, new full-sized sport-utility vehicles the company can't produce enough of. But with competitors set to introduce a wave of similar vehicles, Ford's profit growth could slow considerably, analysts said.
"The third quarter was great for Ford, but one should be skeptical about the sustainability of these results going forward," said Gary Lapidus, a Sanford C. Bernstein & Co. analyst.
Investors, who have boosted Ford shares more than 50% this year, seemed to share those reservations, as the company's shares dropped 44 cents to close at $49.13 on the New York Stock Exchange.
Ford said its per-share earnings in the latest quarter were reduced nine cents a share by the costs of closing plants in Lorain, Ohio, and Windsor, Ontario. It didn't treat these costs as special charges. Also, Ford set aside more money to pay for the depreciated value of vehicles its customers are now leasing.
"They took the opportunity of a good quarter to take some discretionary write-offs, as a hedge against things being a little tougher going forward," said David Healy, a Burnham Securities analyst.
After a charge for early-retirement costs and a gain from the sale of its USL Capital unit, Ford's year-earlier net income was $686 million, or 56 cents a share.
Third-quarter revenue rose to $36.1 billion from $34 billion.
Ford's third-quarter results were boosted by booming sales in Latin America and narrower losses in Europe, where the company has cut costs to cope with a glut of vehicles, a threat now looming in the U.S. light-truck market, analysts say.
During the next several months, Toyota Motor Co., Chrysler Corp. and the Mercedes-Benz unit of Daimler-Benz will all starting selling new sport utilities and pickups in the U.S.
Other than a new near-luxury sedan from Lincoln next year, Ford's product offerings won't change much for two years and it likely will remain dependent on trucks for much of its sales growth, said Wes Brown of Nextrend, a California consulting firm.
At a Glance:
American Airlines parent AMR Corp. said it earned $323 million in the third quarter, boosted partly by higher fares and lower commissions for travel agents. AMR said the profit meant per-share income of $3.55 and came on sales of $4.8 billion. A year earlier, AMR earned $282 million, or $3.06 a share, on sales of $4.6 billion. Its results were better than the $3.30 a share expected by analysts.
Caterpillar Inc. said its third-quarter earnings climbed 24% on increased sales, domestically and abroad, of engines, construction, mining and agricultural equipment. The heavy-equipment maker earned $385 million, or $1.03 a share, compared with $310 million, or 81 cents, in the same period last year. The results easily exceeded analysts' expectations of 92 cents.
NCR Corp. said it will eliminate about 1,000 jobs as it gives its business units responsibility for sales and production to make them clearly responsible for their own profits and losses. The company also reported that its losses narrowed in the third quarter, but mostly because of lower tax and interest costs. The company lost $9 million, or 9 cents a share, compared with a loss of $33 million, or 32 cents, a year ago.
Archer-Daniels-Midland Co. reported that fiscal first-quarter earnings rose sharply over a year ago, when it paid a record $100-million fine to settle a criminal price-fixing investigation. The food-processing company reported a profit of $131.35 million, or 24 cents a share, compared with $3.55 million, or 1 cent, a year ago.
Unisys Corp. said its third-quarter earnings more than tripled to $50.9 million, or 13 cents a share. In the year-earlier period, net income was $14.2 million, or a loss of 9 cents a share, after payment of preferred dividends.
General Dynamics Corp. said third-quarter profit rose 21% because of its acquisition of two Lockheed Martin Corp. businesses. Net income rose to $82 million, or $1.30 a share, from $68 million, or $1.08, a year earlier.
Whirlpool Corp. said third-quarter profit from operations rose to $62 million, or 82 cents a share, from $40 million, or 53 cents, in the year-ago quarter.