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Ford's Q4 profit declines, but results top Street view

Last updated: 09:47 29 Jan 2015 EST, First published: 10:47 29 Jan 2015 EST

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Ford Motor (NYSE:F), the second-largest U.S. carmaker, reported a sharp drop in fourth quarter profit, but beat Wall Street’s expectations. Shares fluctuated.

Net income fell to $52 million, or $0.01 per share, in the October-to-December quarter, from $3.04 billion, or $0.74 per share, a year earlier, the Dearborn, Michigan-based company said in a statement today.

In the year-earlier period, results were boosted by a one-time $2.1 billion special tax item. This year, Ford took a one-time charge of $800 million in the fourth quarter for an accounting change in Venezuela that also shields its future earnings from the volatile currency and operations there.

Excluding one-time costs, the profit was $0.26 per share, beating the $0.23 average estimate of 18 analysts surveyed by Capital IQ.

Revenue fell to $35.9 billion from $37.6 billion. That result topped analysts' estimates of $34.54 billion.

Shares fell 0.8 percent to $14.34 at 10:43 a.m. in New York, after rising to as high as $14.64.

For the full year, Ford posted pretax profit of $6.3 billion, better than the $6 billion it forecast as it cut financial goals in September. In North America, Ford made a pretax profit of $6.9 billion in 2014, which will yield an annual bonus for about 50,000 union-represented workers of $6,900 per person, down from $8,800 in 2013.

Sales of new vehicles in the quarter were 1.58 billion, down from 1.61 billion a year earlier.

Ford had repeatedly warned that its profits would be down in 2014. Last fall, the company cut its full-year pretax earnings forecast to $6 billion from $7 billion to $8 billion.

Ford spent heavily to introduce a record 24 vehicles worldwide, including a redesigned Mustang and the new aluminum-bodied F-150 pickup truck. Ford is spending more than $1 billion to retrofit its two U.S. plants to make the new truck; while shipments have already begun, the Dearborn and Kansas City plants that make the lucrative trucks won't be fully operational until the second quarter of this year.

Ford struggled with higher warranty costs, including a $500 million charge for the recall of 850,000 vehicles with defective air bags. The company is also rapidly expanding in Asia, where it's building five plants and launching the Lincoln brand.

Moving forward, the automaker said its outlook for this year is unchanged for pre-tax profit of $8.5 billion to $9.5 billion. It also forecast higher automotive revenue and operating margins than in 2014, and "improved outlook for automotive operating-related cash flow."

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