Ford (NYSE:$F) is set to release its second quarter earnings report on Wednesday, July 26. Investors will no doubt be awaiting the report, particularly since it will be the first quarterly earnings report for Ford under the leadership of its new CEO. The company has been off to a rocky start so far in 2017 – in the first quarter, net income went down by 35%. Ford cited the decline as due to increased costs for its Super Duty Pickup pick-up, as well as a slow-down of U.S. sales.
For Ford’s second quarter in 2017, analysts are expecting a continued decline of the automobile company’s earnings per share (EPS). The average analysts estimate of Ford’s second quarter EPS is $0.43 — about a 17% decline from Ford’s 2016’s second quarter. Although analysts are expecting a decline for Ford’s EPS, they expect a small rise in Ford’s revenue. Average analysts have estimated a revenue of $37.06 billion for Ford’s 2017 second quarter, a slight rise from the $36.93 billion the company saw in 2016’s second quarter.
Investors are also keeping an eye out – especially with Ford’s new management – on how the company will deal with the automotive industry’s handling of the rise of electric vehicles.
Declining U.S. Sales
The U.S. has been seeing a slow-down in its automobile sales, and Ford has been feeling the impact of this slow-down quite harshly. For the last three months, Ford’s U.S. sales have been falling, mainly due to the industry-wide decline of automobile sales.
Ford has seen the biggest decline in its car segment for the past three months – the company saw a 21.2% fall in April, a 10% fall in May, and a 23% fall in June. However, the company’s SUV and Truck segment did see a rise in the last three months. This should help with Ford’s second quarter earnings somewhat.
Potential in China
Despite falling sales in the U.S., Ford is seeing some positives in its sales overseas. Ford’s Lincoln business in China has been a revenue boost for the company. Compared to June 2016, Ford saw an 84% increase in the sales of its Lincoln vehicles in China in June 2017. The company is also looking to produce a new luxury SUV in China due to high demand.
Although Ford is seeing strong sales in China, the company had to cut the prices of its vehicles in China in order to compete with other automobile companies. As such, second quarter earnings may not be as strong as they could be in this sector.
Rising Sales in Europe
For the majority of 2017 so far, Ford has been seeing an improvement in European sales. Compared to last year, Ford saw a 3.7% rise in its sales in Europe. However, total sales declined by about 1% in June.
Conclusion
Given falling sales in the U.S., Ford’s revenues in the second quarter will no doubt be somewhat negatively impacted. However, it may not be all bad given the company’s international sales as well as positive sales of its luxury brands. As well, it is pretty likely that Ford will be able to meet its expected earnings per share for its second quarter.
For now, investors are mainly concerned of Ford’s future plans under its new leadership.
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