Ford Motor Company (F -1.93%) will report its second-quarter earnings result before the U.S. markets open on Wednesday, July 26. Here's a quick preview and a look at three things to watch as Ford's earnings report unfolds on Wednesday morning. 

How this quarter might compare to a year ago 

Wall Street thinks that Ford's second-quarter earnings will fall from a year ago. In the second quarter of 2016, Ford earned $0.52 per share, excluding special items, on revenue of $39.5 billion. This time around, Wall Street analysts are expecting Ford's earnings, again excluding any special items, to come in at $0.43 per share on revenue of $37.13 billion, on average, in polling conducted by Thomson Reuters.

2017 Ford F-350 Super Duty pickup.

Sedan sales were off sharply, but U.S. sales of Ford's highly profitable F-Series pickups rose 7.4% in the second quarter. Image source: Ford Motor Company. 

How Ford's sales fared in the second quarter

  • Ford's sales in the United States were down 3.3% in the second quarter from the same period last year. But Ford's "mix" of products sold likely improved year over year. Sales of Ford's higher-profit products, like SUVs, pickups, and Lincoln vehicles, all rose year over year, while sales of lower-profit sedans fell. That mix improvement could help boost Ford's pre-tax profit margin in North America from the (very good) 11.3% it posted a year ago.
  • Ford's sales in Europe fell 2.2% in the second quarter from a year ago. But again, Ford's mix was a richer one: As in the United States, Ford's European unit sold more SUVs and fewer cars than it did a year ago.
  • Ford's sales in China rose 7.5% in the second quarter. That sales gain may not translate into a profit gain, as it appears that Ford cut prices in response to rising pressure from lower-cost domestic Chinese automakers. Possible mitigating factor: Sales of high-profit Lincoln brand models were up sharply from a year ago. 

Three things to watch

First: What does Ford's new CEO have to say?

By far, the most important story of Ford's second quarter was the huge management shakeup initiated by Ford's board of directors: CEO Mark Fields was ushered into retirement, board member Jim Hackett was tapped to replace him, and Ford's senior executive ranks were shuffled into a new structure.

Ford CEO Jim Hackett.

New Ford CEO Jim Hackett may take the opportunity to outline some of his plans for the company during Ford's second-quarter earnings call. Image source: Ford Motor Company.

Hackett and his boss, executive chairman Bill Ford, said that the goals of the changes are to streamline Ford's decision-making processes, improve profitability, and increase the pace of change as Ford transforms its business to meet new high-tech challenges.

What does that mean in practice? We don't know yet: Hackett said he would take some time to get up to speed and evaluate Ford's business before outlining his plans in more detail. It's likely that Hackett will get into some of those details during Ford's earnings call on Wednesday.

Second: How did Ford really perform in North America?

Ford is a sprawling global company with operations all over the world, but much of its profit is earned in North America, specifically in the United States, and very specifically from the sale of F-Series pickups and SUVs here. Under Fields, Ford worked (successfully) to boost the already-rich profitability of its pickups, but key SUV models, like the Escape and Explorer, may have fallen a step behind newer rivals.

While auto sales in the U.S. remain strong, signs are mounting that the market is past its cyclical peak. At this point in the cycle, we expect to see some competitors increase discounts in an effort to generate year-over-year sales gains in a market that is flat, or slipping a bit from a year ago. 

Under Fields (and his predecessor, Alan Mulally), Ford has said that in such a situation, it would resist the temptation to discount aggressively, prioritizing pricing -- and profit margins -- over sales gains. In other words, Ford has said that it's willing to cut production and give up market share in order to preserve profitability. 

That theory is being put to the test now. We know that Ford's U.S. sales were down year over year, but it appears that its pricing remained strong. Its pre-tax profit margin in North America will tell us for sure. Also important to watch: Whether Hackett hints at any change in Ford's approach to pricing in sluggish markets. 

Third: How is Ford thinking about China now?

Ford's sales in China rose in the second quarter, but that followed a rough first quarter in which Ford's sales were down sharply year over year. It appears that Ford cut prices on some key models, including the Kuga (the China-market version of the Escape SUV), in response to increasing pressure from domestic Chinese automakers in lower-cost market segments like compact SUVs.

2017 Ford Kuga SUV as sold in China.

Pricing pressure from lower-cost Chinese automakers may have pushed Ford to cut pricing on key models like the Kuga, shown here, during the second quarter. Image source: Ford Motor Company.

That's one part of the China story for Ford. Another: The Chinese government is increasing pressure on automakers to adopt plug-in hybrid and fully electric drivetrains sooner rather than later. 

How is Ford's revamped management team thinking about the pricing challenges and the push to introduce new technology in the region? Watch to see whether Hackett or CFO Bob Shanks sheds more light on the questions during the conference call.