(April 15, 2014) DEARBORN, Mich. — Ford today reported a 2014 first quarter pre-tax profit of $1.4 billion, its 19th consecutive profitable quarter, but net income fell 39 percent from the same period a year ago to $989 million on weaker pricing in the United States and higher warranty expenses.

Profit margins in North America declined 35 percent, due to higher incentives and a $410 million increase in warranty reserves related to previously announced recalls and other service campaigns involving vehicles from past model years. Ford also said “weather-related costs” cut North American earnings by about $100 million.

Revenue edged up less than 1 percent to $35.9 billion.

The company’s pre-tax profit of $1.4 billion was $765 million lower than a year ago. After-tax earnings per share were 25 cents, excluding special items, 16 cents below a year ago.
 
Ford said the company’s results were adversely affected by several significant factors that were not representative of its underlying business run rate. In North America, these included warranty reserve increases for field service actions for prior models, including safety recalls and other product campaigns, and weather-related costs. For South America, these included balance sheet currency exchange effects.
 
In total, these factors reduced first quarter pre-tax profit by about $900 million, or the equivalent of 17 cents per share. They also account for a year-over-year decline in company pre-tax profit of $700 million. While similar factors could occur in the future, it is unusual for items like these to occur in this magnitude in the same quarter.
 
Among the business units, Asia Pacific reported a record quarterly profit, and North America and Middle East & Africa were profitable. Europe reduced its loss by more than half and South America incurred larger losses compared with a year ago. Ford Credit once again delivered solid results.
 
First quarter wholesale volume was up 6 percent and revenue improved about 1 percent from a year ago. The company had continued market share gains in Asia Pacific, including record market share in China.
 
Ford’s Automotive operating-related cash flow was $1.2 billion in the first quarter. The company ended the first quarter with Automotive gross cash of $25.2 billion, exceeding debt by $9.5 billion, and a strong liquidity position of $36.6 billion, an increase of $400 million from year-end 2013.