Ford’s Chief Financial Officer Bob Shanks told CNBC the company’s commodity costs were about $300 million higher from last year, attributing about half of that to the U.S. tariffs on steel and aluminum. The tariffs are expected to eat up about $600 million in profit this year, he said.
It generated $38.92 billion in total revenue, down from the $39.85 billion during the same period in 2017.
All of that drop came from its automotive division, where revenue fell by $1.2 billion from the second-quarter of last year to $35.91 billion.
Analysts were estimating Ford’s revenue would be $35.83 billion.
Analysts are watching to see how the changes Jim Hackett has made in his first year as CEO are playing out. Hackett embarked on an ambitious restructuring plan and boldly decided earlier this year to phase out all of Ford’s sedans, except for the iconic Mustang. He’s been slashing costs and trying to refocus most of its production on its best-selling SUVs, trucks and other profitable ventures.
Hackett said his cost-cutting measures “continue to take hold.”
“We’re clearly committed to redesigning and restructuring the underperforming parts of our business,” he said in a statement announcing the company’s results.
The performance was hampered by a fire at one of its suppliers that caused Ford to temporarily suspend production of its F-150 pickup truck in May. Despite the disruption, the company sold 236,000 of its popular F-150s at a record-setting pace during the first half of the year, the company said.
Ford also cited weakness in Asia as a contributing factor to its earnings slide, saying it’s “taking urgent action” in China — where it lost $483 million — to address its underperforming business there, the company said in its earnings presentation.
“This includes improving cost competitiveness with aggressive fitness actions, localizing more product in China, as well as recruiting more local talent to key management positions,” the company said. Hackett said Ford was close to hiring a new president for its China operations.
Jim Farley, Ford’s president for global markets, told analysts the erosion in both China and Europe is “unacceptable.” The company lost $73 million in Europe during the quarter, compared with a profit of $122 million during the second quarter of 2017.
Ford’s changing up its portfolio of vehicles in both countries to a mix of autos that sell better overseas, executives said on a conference call with analysts Wednesday.
Like other automakers, Ford is also contending with tariffs on steel, aluminum and possibly on vehicles themselves.
Shares of General Motors, the largest U.S. automaker, fell as much as 8 percent Wednesday after cutting its profit outlook for the year, citing higher costs for raw materials. Steel and aluminum prices have risen since the Trump administration imposed tariffs on the two key raw materials used in car manufacturing. Rival Fiat Chrysler fell by as much as 15.7 percent intraday after it also cut its outlook for the year.
CNBC’s Phil LaBeau contributed to this article.