Ford Motor Company (NYSE: F) said that its adjusted pre-tax profit, excluding one-time items, fell 19% to $1.7 billion in the fourth quarter, on higher costs related to rising commodity prices and unfavorable exchange-rate movements.
But Ford's net income rose to $2.4 billion in the fourth quarter, up sharply from a $783 million net loss a year ago, thanks to some tax breaks and a much smaller loss from its annual pension-plan remeasurements. Ford's revenue in the quarter increased almost 7% from a year ago, to $41.3 billion.
For the full year, Ford earned net income of $7.6 billion, a $3 billion improvement over its 2016 result, on revenue of $156.8 billion.
On an adjusted basis, excluding one-time items, Ford earned $0.39 in the fourth quarter, up from $0.30 in the fourth quarter of 2016. For the full year, Ford earned $1.78 per share on an adjusted basis, up slightly from $1.76 in 2016.
Sales of Ford's hugely profitable F-Series pickups rose 9.3% in 2017. Image source: Ford Motor Company.
The raw numbers
Here are the key numbers from Ford's fourth-quarter and full-year 2017 results.
| Metric | Q4 2017 | Change From Q4 2016 | Full Year 2017 | Change From 2016 |
|---|---|---|---|---|
| Revenue | $41.3 billion | 6.7% | $156.8 billion | 3.3% |
| Vehicles sold | 1,749,000 | 2.5% | 6,607,000 | 0.7% |
| Adjusted pre-tax profit | $1.7 billion | (19%) | $8.4 billion | (18.4%) |
| Automotive operating margin | 3.7% | (2.0 ppts) | 5% | (1.7 ppts) |
| Net income | $2.4 billion | Improved by $3.2B | $7.6 billion | 65.2% |
| Adjusted earnings per share | $0.39 | 30% | $1.78 | 1.1% |
Data source: Ford Motor Company. "Adjusted" figures exclude the effects of special items. "Vehicles sold" are wholesales and are rounded to the nearest thousand. "ppts" = percentage points.
How Ford's business units performed in the fourth quarter
Here's a look at how each of Ford's business segments performed. All financial results in this section are presented on an operating (pre-tax) basis.
North America: Ford earned $1.64 billion in its home region in the fourth quarter, down from just under $2 billion a year ago. Its operating margin in the region fell to 6.8% from 8.5% a year ago. Ford had strong sales and gained U.S. market share in the quarter, but higher costs for commodities such as steel and aluminum, along with an expensive recall, more than offset its sales-driven gains.
For the full year, Ford earned $7.5 billion in North America, down from $9 billion a year ago. Its operating margin for the full year was 8%, down from 9.7% in 2016.
South America: Ford lost $197 million in South America in the fourth quarter, a significant improvement over the $293 million loss it posted a year ago. Revenue, sales, market share, and operating margin were all significantly improved from a year ago. Although Ford still has a long way to go in the region, improving economies in the key markets of Brazil and Argentina are helping to lift Ford's efforts.