Ford Credit Takes Knock in 1Q Net Income
DEARBORN, Mich. — A higher provision for credit losses, along with deeper depreciation expenses for leased vehicles, contributed to Ford Motor Credit reporting a drop in net income for the first quarter.
The company recently posted net income of $24 million for the period, down $169 million from earnings of $193 million a year earlier.
On a pre-tax basis, Ford Credit said it earned $36 million in the first quarter, compared with $293 million in the previous year.
In addition to the higher provision for credit losses and higher depreciation expenses on leased vehicles, the company also attributed the decline to higher net losses related to market valuation adjustments from derivatives.
According to Ford Credit, these challenges were offset partially by lower expenses primarily related to the non-recurrence of costs associated with the company's North American business transformation initiative and higher financing margin.
"We had a challenging first quarter due to market conditions and the slowing economy," explained Mike Bannister, chairman and chief executive officer.
"However, our strong underwriting and risk management practices continue to generate high-quality assets. Our global transformation begun a decade ago has laid a solid foundation to help us weather challenging business conditions," he highlighted.
As of March 31, Ford Credit's on-balance sheet net receivables totaled $141 billion, compared with $140 billion at year-end 2007. As a result of the company's sale of the majority interest in Primus Financial Services, along with its operation in Japan and the reclassification of the entity as a discontinued operation, the receivables in each year were reduced by about $2 billion, officials indicated.
Managed receivables were $146 billion on March 31, compared with $145 billion on December 31, 2007.