Hackett's Much-needed Stock Boost Is Nowhere in Sight

by Steph Willems

Published: July 26th, 2018

hackett s much needed stock boost is nowhere in sight

It’s generally agreed that former Ford CEO Mark Fields was shown the door after failing to turn around the company’s steadily declining stock, but his successor hasn’t had any success on that front, either.

Jim Hackett took over in May of 2017 and, despite an ongoing cost-cutting program and numerous new model (and technology) promises, Ford’s share price shows no lift. Wednesday’s earnings call was easily the worst of Hackett’s tenure.

As Bloomberg reports, no member of the Detroit Three went unscathed yesterday. Headwinds in China, rising commodity prices, and new tariffs took a bite out of earnings, with all three automakers adjusting their annual profit forecasts downward.

Ford had the worst showing. Revenue from its automotive division fell by $1.2 billion in the second quarter of 2018, with Europe and especially China posing a major problem. Both regions saw a combined loss of nearly half a billion dollars. Chinese Ford sales fell by 25 percent over the first half of the year, and it’s worth noting that the country’s retaliatory tariffs only took effect this month.

While Hackett claims his $25 billion-plus streamlining plan continues to “take hold,” investors weren’t happy to see profit per share fall to 27 cents — below expectations. That’s half of what Ford saw in Q2 2017. On Wednesday, Ford’s share price dipped to a 52-week low, flirting with the $10 mark.

According to CNBC, Ford’s head of global markets, Jim Farley, called the overseas results “unacceptable,” while CFO Bob Shanks forecasted more pain in the months ahead. The United States’ tariffs on steel and aluminum will likely cost the company $600 million in profit by year’s end, he said. In a statement, Hackett said, “We’re clearly committed to redesigning and restructuring the underperforming parts of our business.”

An investor meeting scheduled for September is now off, with no word on when it will be rescheduled.

Adam Jonas, analyst at Morgan Stanley, wasn’t reassured by what he heard. He got into it with Hackett after the CEO stayed tight-lipped on the company’s restructuring.

“I really do hope you can reconsider the communications strategy, because it’s just not good enough, Bob,” Jonas said. The analyst, no doubt thinking of Fields, asked Hackett if he expected to still have his job by the time the investor meeting rolls around.

“Hell yes, I expect to be in front of everybody declaring where we’re going and what we want to get done,” Hackett replied. “There should be zero question around that.”

[Image: Ford Motor Company]

#China #Earnings #Ford #JimHackett #StockPrice

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6 of 38 comments

V16 on Jul 26, 2018

Outside of the current F Series, what vehicle in the Ford lineup is considered category leading? The stock price is a negative answer to the above question.

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- DenverMike on Jul 26, 2018
  
  Mustang. Stockholders are frightened, as they should be when they watch FOX NEWS.
  
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Akear on Jul 27, 2018

For the first time since the recession Ford's stock is in the single digits (9.86usd). The shocking announcement that Ford was cancelling their entire carline was seen as a desperate not strategic move. It was suppose to prop up Ford's stock price, but has done just the opposite. With Fields in charge Ford had a decent lineup of cars and trucks. Now Hackett has made Ford into a one trick pony that will be almost totally reliant on trucks and SUVs. The next scenario to this sad story is once loyal dealerships will be leaving Ford for greener pastures. This is the one car company that is should be on a dead watch. Please no more stories praising Fords one dimensional truck line. I am sick of F-150 stories. One successful product does not make a company. Besides GM sells far more trucks and SUVs than Ford does. They are also still selling cars.

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- DenverMike on Jul 27, 2018
  
  It reminds me of my favorite burger joint "franchise". They're family owned, and keep it under 400 locations in the south west only. Just burgers, fries, drinks and shakes. No breakfast, open at 10. If you want a taco, burrito, chile relleno, churro, etc, you're plumb out of luck. Yes no stockholders to tell them what to stuff in the menu. Technically they shouldn't exist. And it's the busiest place in town, most places. They keep it simple, nothing frozen, all fresh and delicious. No other place can do that, I guess.
  
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- DeadWeight on Jul 27, 2018
  
  @DenverMike I really miss In-N-Out and go there every time I'm in west for biz. I try to keep a clean diet but definitely make exceptions for places as well-run, immaculately clean, with tremendously "punch way above their weight" quality as In-N-Out. Their menu is a perfect model of simplicity yet orders can be customized (e.g. 3x3 Animal Style). Their employees are incredibly well-trained to be incredibly friendly, polite and efficient. It doesn't even bother me that they print biblical references on their burger wrappers, cups, etc. - they even manage to do this in a totally subtle, non in-hour-face way, and it wouldn't surprise me if unlike many people "of relogious faith" that they're genuine, and not hypocritical blowhards (reason I no longer belong to organized, institutional religion I was raised in accordance with).
  
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- DenverMike on Jul 27, 2018
  
  @DeadWeight "3X3" is 3 patties, 3 cheese slices, for those wondering. I've had a 4X4 (their biggest) but at one time, there was no limit and would pile them on as high (laying on it's side) as you wanted! Animal Fries are great too. But how dare they "break out" of the traditional, written in stone, fast-food, burger joint, 90 damn things on the menu, business model? If they were a Wendy's or something, and decided out of nowhere to narrow their entire menu to just burgers and fries, stockholders would freak the hell out! And rightly so. What do you think would happen to stock prices? Toyota, Nissan, Honda couldn't do what Ford is doing, and really have no reason to. They have a stronghold on sedans/coupes/subcompacts, but definitely couldn't live off their "trucks" alone. Toyota, Nissan, and Honda are like the McDonald's, Jack in The Box, and Burger King of the new car scene.
  
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