Ford posts record earnings as demand for SUVs soars

Ford reported its best ever earnings on Thursday, marking a significant comeback for the US carmaker after it narrowly avoided bankruptcy during the financial crisis.

The Michigan-based manufacturer also reported its first full-year profit in Europe since 2010, finally staunching the bleeding in a crucial market for the company.

“We promised a breakthrough year in 2015, and we delivered,” said Mark Fields, chief executive.

Like its rivals General Motors and Fiat Chrysler Automobiles — Ford is being propelled by appetite for high-margin pickup trucks and sport utility vehicles in the US.

Low fuel prices have placed such “gas-guzzlers” in demand, while cheap finance and easy credit terms have made them even more affordable, pushing sales in the world’s second-biggest car market to record levels.

Ford reported its highest volumes in a decade, selling 6.6m cars and cementing its position as the world’s number six carmaker, while boosting its automotive margin to 6.8 per cent — a level not seen since the 1990s.

The carmaker said this month that 2016 pre-tax profit before special items would be “equal to or higher” than 2015 — such is the carmaker’s confidence that the good times will roll on.

But despite the results, Ford’s shares declined as much as 6 per cent in early New York trading as investors fretted about whether the US car sales peak had been reached. The stock later recovered to trade down about 1.3 per cent at $11.71.

Brian Johnston, analyst at Barclays, highlighted “concerns about a flattening US auto cycle and potential consumer recession”.

Ford’s shares have declined 16.9 per cent this year, underperforming the wider US stock market. GM has fallen 14.7 per cent over the same period.

Ford’s pre-tax profit for 2015 came in at $10.8bn, up almost 50 per cent on the year before. That was in part thanks to a $1.5bn boost Ford received after a change in the way it accounted for its pension liabilities.

Revenues rose 4 per cent to $150bn — the highest level in 12 years — while net income came in at $7.4bn, compared with $1.3bn in 2014.

In Europe, Ford made a pre-tax profit of $259m, thanks to a rising market share in an improving regional car market and strong commercial vehicle sales, as well as cost-cutting actions taken in the wake of the financial crisis. Ford closed its plant in Genk, Belgium, as well as a Transit-making site in the south of England.

But while the Ford’s international operations outside North America improved by $1.4bn in terms of pre-tax profit, its home continent still represented the vast majority of earnings, contributing $9.3bn in pre-tax income.

A strong fourth quarter fuelled the positive annual figures, with Ford reporting net income of $1.9bn in the final three months of 2015 compared with its revised loss of $2.5bn in the same quarter a year ago.