By Ben Foldy
Ford Motor Co.'s operating profit rose 7.5% in the third quarter but the auto maker lowered its target for the full year, marking a setback for CEO Jim Hackett's bid to revive long-term earnings growth through a broad restructuring.
Ford shares fell about 3% in aftermarket trading following the report.
The auto maker's dimmer outlook came despite quarterly results that surpassed analysts' estimates. Ford's operating profit of $1.8 billion for the July-to-September period was buoyed by higher sales in North America and strength in the company's lending arm.
Looking ahead, the company said the cost of warranty repairs, weakness in China and tougher competition in trucks and sport-utility vehicles in North America will prevent its 2019 earnings from hitting a range set in July.
Ford now expects operating income of $6.5 billion to $7 billion for the full year, compared with its previous projection of $7 billion to $7.5 billion.
Mr. Hackett has told investors that an overseas restructuring and a redesigned vehicle-development process initiated last year will start showing results this year. The company is also winnowing its vehicle portfolio to focus on more-profitable lines, such as trucks and SUVs in the U.S. and commercial vehicles in Europe.
Finance chief Tim Stone said Wednesday that Ford is having to spend more on discounts and other incentives for customers as competition in trucks and SUVs in North America -- the company's most lucrative market -- is intensifying. He also cited warranty costs and slumping sales in China, a once-booming market that in recent years has become a money loser for Ford.
The Dearborn, Mich., car company has struggled with the rollout of a new Explorer SUV that executives were counting on to boost second-half earnings. Ford said Explorer sales were down 48% in the third quarter, a drop it attributed to difficulty overhauling its Chicago factory to produce the new model. The company's SUV sales overall fell nearly 11%.
"That was a very challenging launch for us," Mr. Stone said, adding that output of the SUV is approaching desired levels.
Net income for the third quarter sank to $425 million, from $991 million in the same period last year. The company attributed the decline to one-time charges for its global restructuring efforts, including about $800 million in costs related to its joint venture in India with Mahindra & Mahindra Ltd.
Third-quarter revenue eased to $37 billion from $37.6 billion a year earlier.
The auto maker's earnings per share, adjusted for one-time items, registered at 34 cents, beating Wall Street analysts' average forecast of 26 cents.
Ford narrowed its losses in China to $281 million, from $378 million in last year's third quarter. The company has pared costs in the world's largest car market, but its sales continued to decline amid a market downturn that has lasted longer than many executives and analysts expected.
In North America, where the company has leaned heavily on its truck business to drive profit, Ford earned just over $2 billion for the period, up 3% from a year earlier. But its margins on the continent declined to 8.6% from 8.8%, as the company spent more to compete with newer pickup truck offerings from General Motors Co. and Fiat Chrysler Automobiles NV.
Ford trimmed its losses in Europe, as it cut costs and shifted its focus to commercial vehicles like vans. The auto maker laid out plans this summer to close six factories in Europe and eliminate 12,000 jobs in hopes of turning a profit in the region.
While warranty costs are rising for older vehicles, improved quality control should lower such expense in coming years, Mr. Stone said.
--Mike Colias contributed to this article.
Write to Ben Foldy at Ben.Foldy@wsj.com