By Craig Trudell
DEARBORN, MICH.: Ford said Thursday that third-quarter profit beat estimates and boosted its outlook for the year on rising demand for F-Series pickups in North America and making progress in shrinking its losses in Europe.
Ford reported net income of $1.27 billion in a statement. Excluding one-time items, the per-share profit was 45 cents, exceeding the 37-cent average estimate of 15 analysts surveyed by Bloomberg. The second-largest carmaker raised its forecasts for total company pretax profit and operating margin for the full year.
The results show that Chief Executive Officer Alan Mulally’s turnaround is advancing and lessened concern that the company would suffer should he decide to leave early. Microsoft Corp. board members have spoken with the executive about being a candidate for its next CEO, people with knowledge of the talks have said. Ford has said Mulally will stay through at least 2014.
“Alan Mulally is in very many ways directly responsible for Ford’s transformation,” said Michael Razewski, a New York-based principal at Douglas C. Lane & Associates, which oversees $3.4 billion including Ford shares.
Meanwhile, Mulally would not say Thursday if he has talked to Microsoft about the CEO job at the software giant. “We don’t comment on the speculation,” Mulally said in response to a question from the Associated Press on the company’s conference call.
Mulally, 68, repeated that there’s no change in Ford’s plan for him to stay as CEO through the end of 2014. He has held the top post since 2006, when he was hired from aviation giant Boeing to rescue the company. Ford is set to report its fifth straight profitable year under Mulally.
Microsoft is reportedly considering Mulally as a replacement for CEO Steve Ballmer, who intends to step down in less than a year.
One management expert said the Ford CEO’s no-comment indicates that he has some interest in the Microsoft job.
“His nondenial denial means that he’s either talking to them or that he wishes he were talking to them,” said Yale University management and law professor Jonathan Macey, who has written a book on corporate governance.
Mulally said Thursday that nothing has changed since November, when Ford announced that he would stay through 2014 and that veteran executive Mark Fields would take over day-to-day business as chief operating officer.
About Ford, speaking before the results were announced, analyst Razewski said: “The heavy lifting has been done in North America, they’re working through their issues in Europe, and the China growth strategy is in place. This isn’t necessarily a business that needs to be transformed anymore.”
Mulally has turned around Ford by broadening its lineup with more competitive cars and expanding its presence in markets such as China. He has turned over key management duties, such as running the main weekly meeting of executives, to Chief Operating Officer Fields, 52.
Ford shares are up about 35 percent in 2013.
Ford said it now expects total company pretax profit and automotive operating margin to be higher than last year. The company previously said profit would be about equal or higher and margin would be about equal or lower. In Europe, Ford now forecasts a full-year loss of less than $1.8 billion, a smaller deficit than it previously estimated.
The third-quarter results compared with 40 cents per share, excluding some items, and net income of $1.63 billion, or 41 cents a share, a year earlier.
Ford earned a $2.3 billion quarterly profit in North America.
Its third-quarter operating margin of 10.6 percent in the region compares with 12 percent a year earlier.
Results in Ford’s home market were bolstered by rising demand for its F-Series pickups. Large pickups generate $8,000 to $10,000 in gross profit and account for the bulk of North American earnings at Ford and General Motors, according to analyst firm Morgan Stanley.
Ford F-Series U.S. deliveries surged 21 percent to 559,506 this year through September.
That widened its lead over GM’s Chevrolet Silverado and GMC Sierra sales, which rose 18 percent, and Chrysler Group LLC’s Ram pickups, up 19 percent.
Ford’s operations outside North America earned $57 million, the company’s best result since the second quarter of 2011, Chief Financial Officer Bob Shanks said. Ford’s global automotive operating margin improved to 7 percent, also the best in more than two years.
A prolonged slump in Europe, where Ford is undergoing a multiyear restructuring, is beginning to moderate, with the biggest industry sales increase in more than two years in September. The operating loss for Ford’s European operations narrowed to $228 million during the third quarter, from $468 million a year earlier.
The Associated Press contributed to this report.