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Tesla posts surprise Q3 profit; Daimler's, Volvo's Q3 up slightly, but Ford's down

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TESLA Inc on Wednesday surprised investors by posting a profitable third quarter, boosted by record deliveries, cost cuts and improved production schedules for its new electric vehicle model. Its gross margins, an important profit indicator for investors, exceeded expectations.

Tesla posted a cash balance increase to US$5.3 billion. It reported a profit of US$1.86 per share, far beating analyst expectations for a loss of 42 cents per share. It exceeded promises by its CEO Elon Musk, who in July said Tesla would break even in the third quarter and turn a profit by the end of 2019. The company has said it plans to deliver 360,000 to 400,000 vehicles for all of 2019, and on Wednesday said it was "highly confident in exceeding 360,000 deliveries this year". The electric car maker's net income attributable to common shareholders was US$143 million, or 78 cents per share, for the third quarter, compared with US$311 million, or US$1.75 per share, a year earlier. Excluding items, Tesla posted a profit of US$1.86 per share. Analysts were expecting a loss of 42 cents per share.

However, revenue fell nearly 8 per cent to US$6.30 billion in the quarter ended Sept 30. Analysts had expected revenue of US$6.33 billion, according to IBES data from Refinitiv.

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Meanwhile, in Frankfurt, Daimler reported a slight rise in third-quarter operating profit on Thursday boosted by sales of Mercedes-Benz cars, but announced cost cuts and warned that legal provisions tied to diesel litigation could rise.

Group earnings before interest and taxes (EBIT) rose 8 per cent to 2.69 billion euros (S$4 billion), up from 2.49 billion euros in the year-earlier period, boosted by an 8 per cent rise in sales of luxury cars and solid cashflow.

Daimler said it would review costs after the margin at Mercedes-Benz Cars dropped to 6 per cent, down from 6.3 per cent in the year-earlier period due to production problems with the Mercedes GLS and because cars were being fitted with costly anti-emissions filters. It reiterated that it expected group earnings before interest and taxes to be significantly lower than last year.

In Stockholm, Volvo Cars reported a sharp rise in third-quarter revenue and profits on Thursday helped by cost savings, but also sees market conditions continuing to pressure margins this year.

Volvo, part of China's Geely group, said its quarterly operating profit rose 90 per cent to 3.49 billion kronor (S$495 million), with revenues improving by 14 per cent to 64.8 billion kronor. Its results were also boosted by strong demand for its SUV models. It said its sales growth had outpaced the industry in Europe, China and the US, as it sold 166,878 cars globally in the quarter.

In Dearborn, Michigan, Ford Motor Co on Wednesday posted a lower quarterly profit as it took charges for its global restructuring, and reduced its full-year operating profit forecast due to higher warranty and incentive costs, as well as lower-than-expected sales in China.

Ford's ongoing restructuring includes cutting costs and overhauling its product lineup in key global markets like China and Europe. As at Wednesday, Ford so far had recorded only US$3.3 billion of the projected US$11 billion in charges it previously said it would take for the global restructuring, up from US$2.2 billion at the end of Q2.

Ford on Wednesday reported a third-quarter net profit of US$425 million, or 11 cents a share, compared with US$991 million, or 25 cents a share, a year earlier. Excluding one-time charges, Ford earned 34 cents a share, above the 26 cents analysts had expected according to IBES data from Refinitiv. Revenue in the quarter fell 2 per cent to US$37 billion, above the US$33.98 billion expected.

Virtually all of Ford's third-quarter pretax profit came from North America - its most lucrative market.

Ford said on Wednesday that it now expects full-year adjusted operating profit in the range of US$6.5 billion to US$7 billion, compared with US$7 billion last year. In July, it had forecast it would increase, ending in the range of US$7 billion to US$7.5 billion.

The company also said it expects adjusted earnings this year in the range of US$1.20 to US$1.32 a share. Previously, the high end of its forecast had been US$1.35. Analysts expect US$1.26 a share.

Ford's third-quarter operating profit in North America was just over US$2 billion. Its US sales in the quarter fell 4.9 per cent, but demand for lucrative pickups remained strong with an increase of almost 9 per cent.

China revenue in the quarter slid about US$300 million to US$900 million and Ford's share in that market fell to 2.3 per cent from 2.9 per cent last year.

Meanwhile, Hyundai Motor Co reported third-quarter earnings that missed analysts' estimates on a continuing slump in demand in China and costs to settle lawsuits over suspected faulty engines. Operating profit was 379 billion won (S$440 million), compared with the average analyst estimate of 444 billion won. Net income was in line with predictions and sales topped estimates.

A settlement of class-action suits in the US and South Korea resulted in a one-time charge of about 600 billion won in the third quarter. REUTERS, BLOOMBERG