Ford Motor Co. has tidied up North America, sweeping out old products and excess costs. But the rest of the world keeps making a mess.
The company's net income fell 45 percent to $1.4 billion in the first quarter. Ford took a beating from plummeting European sales and weaker results in Asia and South America. It also started paying more in taxes.
North America came to the rescue, with a $2.1 billion profit, its best first-quarter performance since Ford began reporting the region separately in 2000. In a note to investors, Jeffrey's analyst Peter Nesvold said Ford is seeing success no one would have predicted before its turnaround took hold three years ago.
"These are levels of profitability that few ever expected to see from the Detroit Three," he wrote.
To see how far Ford has come, consider the first quarter of 2004, when Ford made $1.8 billion in North America. The company sold 1 million cars and trucks that quarter, when the market was stronger. In the most recent quarter, with a weaker market, Ford made more money even though it sold just 651,000 vehicles.
Ford is making more because it has better products, and because buyers are shelling out cash for upgrades like Ford's touch-screen dashboard and inflatable seat belts. Auto pricing site TrueCar.com said U.S. buyers paid an average of $31,723 for Ford cars and trucks in the first quarter, up more than $1,200 from the year before.
Also in 2004, high-profit trucks made up 60 percent of sales; now, they make up 40 percent.
"It underscores our ability to make money on vehicles other than trucks," Chief Financial Officer Bob Shanks said.
Ford still has some housekeeping to do. The company said Friday it will offer lump-sum pension payments to about 90,000 U.S. white-collar retirees and former employees, which it believes is the largest such offer in U.S. history. Payouts will start later this year.
Ford doesn't yet know how much the plan will cost, but Shanks says it will relieve Ford of the risk of low asset returns on the pension fund.
"There's no exposure to the volatility of the obligations," he said. "They're just gone. They're just not anything we have to deal with."
Ford's net income of $1.4 billion, or 35 cents per share, fell from $2.5 billion, or 61 cents, in the first quarter last year. Revenue fell 2 percent to $32.4 billion.
That put the company ahead of Wall Street's expectations. Without one-time items, including buyouts of 1,700 U.S. factory workers, Ford earned 39 cents per share. Analysts polled by FactSet forecast earnings of 35 cents on revenue of $32.3 billion.
Ford's stock price fell 27 cents, or 2.3 percent, to $11.60 on Friday.