Ford to Investors: We Have Good News and Bad News

by Steph Willems

Published: January 25th, 2018

ford to investors we have good news and bad news

Despite posting a 7 percent increase in revenue and a net income of $2.4 billion (up from a $800 million loss a year ago), Ford’s fourth-quarter 2017 earnings missed analyst expectations. Blame a few key factors.

First, Ford faced an increase in commodity prices, ratcheting up the cost of steel and aluminum. Add to that increased warranty costs, unpleasant foreign exchange rates, and sinking sales in China, and the company’s pretax profit fell 19 percent from a year ago, hitting $1.7 billion.

As the company seeks to convince investors to put its trust in the automaker’s vision, Ford delivered earnings of 39 cents per share, not the 42 cents analysts projected.

“Our balance sheet remains strong and we are focused on improving the company’s fitness to strengthen future results,” said Ford’s chief financial officer, Bob Shanks, in a statement. “We remain committed to providing value to our shareholders including expected distributions totaling about $3.1 billion in 2018.”

In a conference call with the media, however, Shanks said, “We have to be far fitter than we are, regardless of what the future is.”

Ford CEO Jim Hackett has talked of creating a leaner, more resilient company since taking the helm last year. Part of the plan includes culling existing vehicles, though we don’t yet know exactly which models those will be. As well, Ford plans to invest in cutting edge technologies — autonomous driving systems and electric powertrains — while pursuing the growing green market in China.

It will take time before the automaker reaps a financial reward from these actions, if indeed they pay off.

In the meantime, while the automaker remains strong in the North American market (where it increased its market share and revenue last quarter, only to see commodity and development costs shrink its operating margin and profits), it needs to stem some overseas bleeding. Ford posted a loss in both South America and the Middle East and Africa. It barely held its head above water in the Asia Pacific region, while European profits sank 66 percent.

Since the start of trading Thursday, Ford’s stock price fell 4.23 percent, driving what had been a flat week lower. That’s the opposite direction of good, especially considering the reason Hackett’s predecessor received his walking papers.

As for unionized Ford autoworkers in the United States, last year’s financials mean a smaller profit-sharing check this time around. This year’s payout amounts to $7,500, some $1,500 less than last year.

[Source: Reuters]

#Financials #Ford #FordMotorCompany #HighFinance #ProfitsEarnings

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11 of 19 comments

Big Al from Oz on Jan 25, 2018

I think Ford's woes and their excuses are vague. There are plenty of manufacturers who have improved their bottom line. Commodity pricing is global, its not as if Ford pays more for commodities. Or has Ford chosen the wrong commodity for their biggest seller? Ford even has a large range of SUVs and CUVs. Again, Ford's aluminium F Series venture cost them a sh!tload ...... of borrowings. I know I'll get the usual "but look at pickup profits"comments. But what are Ford's REAL aluminium Wunder Trux earnings? I mentioned this about Ford's profits due to the aluminium conversion from the very beginning. Even then it was evident that Ford will remain the number two pickup maker in the US. Ford's aluminium wunder trux have moved to SUVs to try to spread the costs further, but expenses will increase, so it might be a big a gain as Ford is wanting. Ford has a long way in matching GM for supremacy in the full size pickup and the platformed shared SUVs. When it is costing thousands more to produce an equivelant product you can't expect to be as competitive. So, Ford will profit less. The F-150 isn't that great I had a new Coyote power aluminium wunder truck for over 6 months, the couple of Rams I've had were better on a daily basis, and they cost less to produce and sell. Ford, aluminium was the wrong choice. High tensile steel was a far cheaper option, you had the technology to use it. Aluminium is good when used correctly for the correct application. Your program office obviously didn't read the articles researching the cost of aluminium in transport, from design to the user of the end product.

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- Conundrum on Jan 25, 2018
  
  No doubt about it, Professor, you should be running Ford. In fact, the whole world. Why stop at the piddling small bits? It's rare that someone in the Super Genius class comes along to point out to everyone the error of their ways; the only other one is Elon Musk who is designing a new special underground boring machine to put his vacuum tunnel transporter into California's earthquake subduction zone, while the average dolt swoons in approval. TTAC is too small a spot for your brand of genius. Leave here and go and inform Trump how to MAGA in the vision of Oz. With your persuasive powers, no doubt the world will be saved by the end of next week. Begone on your pilgrim prophet voyage! No time to be lost. We depend on you!
  
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- Big Al from Oz on Jan 25, 2018
  
  @conundrum conumdrum, That's the way I see it from Ford. And who was it that pushed for aluminium trucks? Probably and ex aviation guy? Remember?
  
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- DenverMike on Jan 26, 2018
  
  Weren't you the one that informed us a couple years back, how Ford's aluminum F-series experiment would completely fail, and the eminent demise of Ford, nonstop ad nauseam, for almost a year before its release? Or was that a different BAFO? Ford's aluminum experiment/investment wasn't going to be cheap or easy (compared to regular to high strength steel), but we knew this, Ford knew this. If it was, almost all autos from all automkers would be all (or mostly all) aluminum. We're talking relatively small, short-term losses for huge, long-term gain potential. Pickup trucks can easily hang on to the same chassis/platform for 20 years or more, when designed right. Yes extensive use of "exotic" aluminum is still a big gamble not many mainstream automakers are willing to take, especially when focused on the short term, like most of their stockholders. Ford's bigger gamble has been trying to fill every segment and selling cars overseas.
  
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- Blackcloud_9 on Jan 26, 2018
  
  Um...didn't the Ford f-150 just outsell both the Chevy AND GMC version of GMs pick-up recently?. The Ford P/U has out sold Chevy for years but Chevy (GM) fanboys have always pointed out that if you combine Chevy and GMC sales, they are more than than the hated F-150. Now, I'm much more of a GM guy than Ford but numbers don't lie. I don't see the Ford F-150 dominance crumbling anytime soon.
  
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- Big Al from Oz on Jan 26, 2018
  
  @Blackcloud_9 Blackcloud, The Sierra and Silverado come from the same business. They even platform share.
  
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- Gmichaelj on Jan 26, 2018
  
  @Big Al from Oz Big Al: If I am not mistaken, F series outsells Silverado and Sierra combined. Pretty sure that's what Blackcloud said. You have to add the Colorado and Canyon for GM to outsell Ford in trucks.
  
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- Big Al from Oz on Jan 27, 2018
  
  @gmichaelj gmichael, I don't think so. Then add the platform sharing SUVs and GM from a cost basis is raking it in compared to Ford.
  
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- Art Vandelay on Jan 27, 2018
  
  @gmichaelj If only there was some, I don't know, web we'll say, full of information information where someone could spend 10 seconds and look up such information. http://news.pickuptrucks.com/2018/01/best-selling-pickup-trucks-december-2017.html Yes, wit respect to full sized Pickuos Ford outsells both GM models by an amount roughly equal to the total number of fullsized trucks Toyota sold in 2017 and before you say that is an insignificant number id point out it is barely under the amount of midsized trucks GM sold.
  
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PrincipalDan on Jan 26, 2018

Eh... This only becomes a story IF it becomes a big enough deal that during the next major redesign Ford switches back to steel.

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- Gmichaelj on Jan 26, 2018
  
  "... during the next major redesign Ford switches back to steel." I can only imagine how the resale value of Used Alum Fords would shoot up if Ford went back to Rust-bodies.
  
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