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Ford forecasts $112 mn Q4 loss amid restructuring costs
DETROIT, Jan 17, 2019 (BSS/AFP) – Ford said Wednesday it expected to post
a $112 million loss in the fourth quarter of 2018 as the automaker implements
a massive restructuring in the United States and Europe.
The second-biggest US automaker said it would still post a profit after
charges stemming from the drive to cut $11 billion in costs.
The firm sees adjusted profit of 30 cents a share during this period,
according to the statement, less than the 32 cents anticipated by the
markets.
For the full year, Ford will post a net profit of $3.7 billion, less than
half the 2017 result.
Adjusted earnings per share are expected to be $1.30 across the year,
right at the lower end of its $1.30-1.50 estimate in October.
“Over the last 19 months, we have worked to reshape and transform our
company — sharpening our competitiveness, taking actions to improve our
profitability and returns, and investing in our future,” Ford CEO Jim Hackett
said in a statement.
Ford last year announced it would halt production of almost all sedans and
small cars in the United States to save $11 billion, and last week announced
a massive restructuring of its European operations to boost profitability,
including thousands of potential job cuts. It might also scrap the Fiesta,
Focus and Mondeo models in Europe, where they are popular.
Jim Farley, Ford’s president of Global Markets, said, “We are now
beginning to see the results of our capital shift away from traditional
sedans to trucks and SUVs with new utility nameplates globally.”
The earnings figures were released just a day after the automaker
announced a global alliance with Germany’s Volkswagen to build commercial
vans and pickups starting in 2022.
– Challenges for auto industry –
The alliance follows others in the auto industry, which is facing rising
costs amid the drive to develop new technologies, as well as changing
consumer preferences.
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Company executives heralded the new alliance with VW as a cost savings
move that would boost profitability by 2023.
Ford is aiming to post better financial results this year than last but
warned Wednesday of potential headwinds: Brexit, tariffs, currency
fluctuations, salary negotiations and the health of the Chinese and European
economies all could hit the bottom line.
Ford and VW are joining forces to develop commercial vehicles and also
will “investigate collaboration on autonomous vehicles, mobility services and
electric vehicles and have started to explore those opportunities,” the
company said.
The transformation push comes at a time when the automotive sector is
undergoing major changes. Autonomous and electric vehicles have been
expensive to develop and require either new factories or a complete
modernization of existing ones.
Automakers have had to contend with those investments, the returns from
which could be years away, while also maintaining a fresh line-up of vehicles
for the present-day market.
Edmunds analyst Jessica Caldwell cautioned that VW and Ford would have to
forge a deeper partnership if they were to realize the full benefits of an
alliance.
“Cutting costs by sharing vehicle architectures and manufacturing
facilities is just table stakes in this new world and is a nice place to
start,” Caldwell said.
“However, the key to success will be if Ford and VW can help each other
fend off the upstarts and become leading forces in electric and autonomous
vehicle technology.”
Ford shares lost more than six percent by the end of the day.
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