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

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

More by Steph Willems

Comments
Join the conversation
6 of 38 comments
  • V16 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.

    • DenverMike DenverMike on Jul 26, 2018

      Mustang. Stockholders are frightened, as they should be when they watch FOX NEWS.

  • Akear 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.

    • See 2 previous
    • DenverMike 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.

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
Next