January 23, 2019
By Nick Carey and Ben Klayman
DETROIT (Reuters) – Ford Motor Co <F.N> on Wednesday posted a lower operating fourth-quarter profit as losses in every global region except North America weighed on results.
The No. 2 U.S. automaker, which has announced an alliance with Germany’s Volkswagen AG <VOWG_p.DE>, is restructuring operations globally. It is making cuts in Europe, looking to reorganize its South American operations and turn around China – all unprofitable regions.
“It was not a year we were happy with and the fourth quarter continued that theme,” Chief Financial Officer Bob Shanks told reporters at the company’s headquarters outside Detroit. He acknowledged the potential this year for disruptions such as strikes in regions where it is restructuring.
In 2018, Ford took a $3.3 billion combined hit from higher tariffs and commodity costs, unfavorable foreign exchange and recalls related to former airbag maker Takata.
Last week, Ford provided a cloudier 2019 outlook because of tariff costs and uncertainty over Britain’s exit from the European Union, only saying it had the potential for higher earnings and revenue.
That was in contrast to Ford’s larger U.S. rival, General Motors Co <GM.N>, which on Jan. 11 forecast higher 2019 earnings that far surpassed analysts’ estimates.
Shanks reiterated on Wednesday that Ford’s market-leading presence in Britain gave it extensive exposure to the effects of Brexit.
Ford said on Jan. 10 that it would cut thousands of jobs and look at plant closures in Europe as part of its plan to return to profit in the region.
Ford posted a fourth-quarter net loss of $116 million, or 3 cents a share, down from a net profit of $2.5 billion, or 63 cents a share, in the same quarter in 2017, largely because of one-time pension costs and other charges.
Excluding one-time charges, it earned 30 cents a share, in line with an outlook Ford executives provided last week that was shy of Wall Street’s expectations.
In North America, Ford posted a pre-tax profit of $2 billion. It saw losses in every other region, with Asia reporting the largest loss of $381 million, driven by plummeting sales in China.
On Jan. 15, Ford and VW said they would join forces on commercial vehicles and were exploring joint development of electric and self-driving technology.
On Wednesday, sources said that Germany’s automakers, including VW, were in talks to jointly develop autonomous cars. VW reiterated it was still looking for new partners, while Shanks said the companies were still in talks.
Ford, which ended 2018 with $23.1 billion in cash, previously said it remained committed to its operations in Europe and South America, and its losses in China would narrow this year. Chief Executive Jim Hackett said on Wednesday that analysts “don’t have to wait long” for Ford’s South American reorganization plan.
Ford shares rose about 1 percent to $8.41 in extended trading.
(Reporting by Nick Carey and Ben Klayman; Editing by Nick Zieminski and Peter Cooney)