Ford (NYSE:F) has made many investors happy this morning by hitting just about every positive note possible in its Q2 earnings report. It's just a continuation of the great turnaround story witnessed at the Blue Oval since CEO Alan Mulally took over in 2006. Ford beat analyst expectations on both pre-tax EPS and revenues. In addition to that, Ford also narrowed its loss in Europe significantly and improved drastically in China and South America. Here are the details.
By the numbers
Starting from the top-line revenue, Ford recognized a 15% increase to $38.1 billion, beating average estimates of a 12.5% increase to $35.23 billion.
Next, looking at Ford's pre-tax profits, the company posted its 16th consecutive quarter of profitability; at $2.6 billion, or $0.45 cents per share, it drastically beat the average estimate of $0.37 cents per share. If you're comparing to numbers from a year ago, it's an improvement of $0.15 cents per share – very significant.
Down to the bottom line, Ford reported a net income of $1.2 billion, or $0.30 cents per share, which is an increase of $0.04 cents per share or $193 million compared to a year ago.
As is usual with Ford, the main driver of its revenue and profits is North America, driven by multiple market factors such as improving transaction prices and increased sales with its redesigned models. Such factors have led both to Ford's best second quarter and first half profit in North America.
As always the F-Series, which is up 22% year to date, brought in huge profits; in combination with the Escape and Fusion, the truck model helped increase Ford's market share by 0.08% year to date. That's a huge gain in an industry were a fraction of a point is drastic, and it is the largest increase of any full-line automaker.
Outside of the phenomenal results in North America, Ford's Q2 report shows much progress has been made overseas. The Asia-Pacific-Africa region had its best quarterly profit and Ford recognized a return to profitability in South America. Perhaps the best piece of news was a decline in losses in Europe, which are down from $404 million a year ago to $348 million. That's also a $114 million improvement from last quarter and it prompted Ford to lower guidance on its yearly losses from $2 billion to $1.8 billion – an excellent development for investors.
CEO Alan Mulally summed it up perfectly in a press release to Ford investors:
Our strong second quarter with improved results in every region around the world is another proof point that our One Ford plan is continuing to deliver and is building momentum ... We remain absolutely committed to our plan of serving customers in all markets with a full family of vehicles offering the very best quality, fuel efficiency, safety, smart design and value. As we do, we are providing profitable growth for everyone associated with Ford.
This was a quick overview showing how profitable and strong Ford's Q2 really was – even better than my optimistic view. Ford's vehicles are selling well, the brand image is practically flawless, market share is increasing, and profitability is improving consistently – all while minimizing losses in Europe. The market responded favorably and promptly sent Ford's stock price up 3% in pre-market trading. There's even more great information packed into the report and the Motley Fool will bring more details throughout the day and the week regarding important factors most investors overlook – including Ford Motor Credit and pension obligations. Until then here's a hint: It's good stuff, as usual.
Editor's note: An earlier version of this article misstated the extent of the losses attributed to the European market. The Motley Fool regrets the error.
Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.