Currency Headwinds Hurt Ford’s 1Q16 Revenue outside North America


May. 6 2016, Updated 9:07 a.m. ET

Ford’s 1Q16 revenue

Previously, we looked at how Ford Motor Company’s (F) 1Q16 revenue was positively driven by strong F-series and fleet sales in North America. While the company’s North American revenue rose sharply, its performance outside North America wasn’t impressive.

In this part of the series, we’ll take a closer look at some factors that negatively affected Ford’s 1Q16 performance outside North America.

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Improved performance in Europe

In 1Q16, Ford’s European vehicle sales rose by 6% year-over-year (or YoY) to 399,000 units. During the quarter, the performance of Ford’s sports utility vehicles and commercial vehicles in Europe improved.

Despite this, the company’s revenue remained unchanged at $6.9 billion. This negative impact on the company’s European revenue was due to weak European currency. At a constant currency exchange rate, the company’s 1Q16 European revenue also witnessed a 6% rise compared to 1Q15.

Strength in Asia-Pacific

In 1Q16, Ford’s vehicle sales in the Asia-Pacific region stood at 398,000 units, 9% higher than the corresponding quarter of the previous year. With this, the company’s revenue in the region rose 18% YoY to $2.7 billion.

This positive growth in the company’s revenue was driven by improved performance in China and higher sales of newly launched vehicles in the region. However, at a constant currency exchange rate, its 1Q16 Asia-Pacific revenue rose 25% YoY.

Currency headwinds

In the last several quarters, the US dollar has witnessed strength against a basket of currencies, including the euro and the Japanese yen. Because of this, European and Japanese automakers such as Fiat Chrysler Automobiles (FCAU), Volkswagen (VLKAY), and Toyota (TM) have benefited.

In contrast, most US-based automakers (RWL) with international operations, including Ford and General Motors (GM), have been negatively impacted by the dollar’s strength.

Continue to the next part to find out why Ford’s performance in South America, the Middle East, and Africa suffered in 1Q16.


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