As Justice Department Launches Ford Probe, Automaker Surprises Investors

Steph Willems
by Steph Willems
as justice department launches ford probe automaker surprises investors

That headline was unavoidable, by the way. On the same day Ford Motor Company released a better than expected first-quarter earnings report, it also revealed the Justice Department has opened a criminal investigation into its emissions certification process — a probe that could see fuel economy ratings rolled back.

Wall Street seemed much more interested in the financial news, however, giving the company’s stock a much-needed lift. In the Glass House, Jim Hackett must be smiling.

The testing probe has to deal with Ford’s road load calculations, an issue that came to light earlier this year when Ford launched an investigation of its own. In a filing to the U.S. Securities and Exchange Commision, the automaker warned it “cannot provide assurance that it will not have a material adverse effect.”

Ford claims the “matter currently focuses on issues relating to road load estimations, including analytical modeling and coastdown testing.”

In a statement reported by CNBC, Kim Pittel, Ford’s vice president of sustainability, environment and safety engineering, said, “Our focus is on completing our investigation and a thorough technical review of this matter and cooperating with government and regulatory agencies.”

If the automaker’s math turns out to be wonky, several unnamed models might end up saddled with new, and perhaps unfavorable, fuel economy and emissions figures. The news wasn’t enough to scare off investors, however. The company’s stock rose more than 8 percent in extended Thursday trading, and the climb continues on Friday.

What did investors see? Improved North American margins and profit, plus adjusted earnings per share of 44 cents (unadjusted: 29 cents) — a better return than the forecasted 27 cents. Ford took an axe to its overseas operations in Q1 2019, incurring one-time financial hits. Still, the overseas operating loss of $196 million was a steep climb-down from last quarter’s loss, with the company’s Europe, Middle East and Africa, and Asia-Pacific regions posting profits. South America and China made up the overseas loss. Automotive revenue of $37.24 billion outpaced forecasts, despite the company’s overall revenue falling year-over-year.

Much like in previous quarters, Ford’s bread basket continues to be North America, where earnings before interest and taxes rose to $2.2 billion from Q1 2018’s $1.9 billion. Thank Ford truck sales and an elevated Lincoln brand for that, as well as the 8.7 percent margin (up from 7.8 percent, year over year).

While Ford’s chief financial officer, Bob Shanks, claimed Q1 will probably be the company’s best quarter this year, he sees 2019 delivering “better results” than 2018. For the sake of CEO Jim Hackett, the earnings report is hopefully the start of a new chapter for Ford … and the beginning of a sustained upward trend in the company’s stock. His job depends on it.

“With a solid plan in place, we promised 2019 would be a year of action and execution for Ford, and that’s what we delivered in the first quarter,” said Jim Hackett, Ford president and CEO. “We’re pleased with the progress and the optimism that it brings.”

The coming year brings with it numerous launches of higher-margin vehicles, including the Lincoln Aviator and Corsair, and Ford Super Duty, Explorer, and Escape. The resurrected Ranger pickup went on sale in January.

[Image: Ford]

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  • Inside Looking Out Inside Looking Out on Apr 28, 2019

    Does anyone know is it going to be ICE powered or BEV? What platform? RWD or FWD? Last time it was Mazda IIRC. I am actually interested. I always liked Probe.

  • Lorenzo Lorenzo on Apr 29, 2019

    I always thought the Probe name sounded dirty. Maybe that was part of the appeal? It didn't appeal to many: more Mustangs were sold in its first year than the Probe sold in six years.

  • Lou_BC I realized it wasn't EV's burning by the absence of the usual suspects.
  • Kwik_Shift A manual bug eye WRX wagon (2001-03) would interest me more.
  • El scotto Ferrari develops a way to put a virtual car in real time traffic? Will it be multiple virtual players in a possible infinite number of real drivers in real time situations?This will be one of the greatest things ever or a niche video game.
  • El scotto It's said that many military regulations are written in blood. Every ship's wheel or aircraft joystick has a human hand on it at all times when a ship or aircraft are under power. Tanks, APC's and other ground vehicles probably operate under the same rules. Even with those regulations accidents still happen. There is no such thing as an unmanned autopilot, ever. Someone has to be on the stick at all times.I do not think MB understands what a sue-happy nation the USA is. The 1st leased MB in a wreck while this Type 3 "Semi-Autonomous" driving, or whatever it is called, will result in an automatic lawsuit. Expect a class action lawsuit after the 1st personal lawsuit is filed. Yes, new MB owners can afford and ever are lawyers.Mercedes Benz; "The best wrecks or nothing!" Oh and has anyone noticed that Toyota/Lexus and Honda/Acura, the gray suit with white shirt and striped tie, automobile companies have stayed away from any autonomous driving nonsense?
  • Merc190 Very streamlined but not distinctive enough for a Mercedes. And besides, the streetcar of the early 20th century seems a far more efficient and effective method of people moving in essentially an autonomous manner. A motor car is meant to be driven with proper attention to what's important in every situation. To design it otherwise is idiotic and contradictory.