GOLDING'S TAKE: Ford’s chief financial officer. Is his number up?
Ford CFO Lewis Booth once ran Ford of Europe
Here we go: back to the bad old days at Ford. Alan Mullaly’s sprucing up of Ford’s processes has just neglected to keep an eye on the crucial matter of managing profit expectations.
Equity analysts who follow Ford described the fourth quarter profit announcement on Friday as “a miss”. A miss is a cardinal sin. Analysts are people who strut around confident that the forecasts they have published for the company are going to be more or less spot on the money. Here comes the announcement and it’s the uh-oh moment. Share price crashes 11% which constitutes a bad day, investors blame the analysts, analysts blame the company and the company says “we did tell you but you weren’t listening”.
On the post-results conference call with analysts, Mulally waded in an attempt to save his CFO from embarrassment: “We gave pretty clear guidance that we would have heavy costs in the fourth quarter; obviously we were not clear enough. We said that we were not going to chase market share in Europe and guided on likely European profit. Obviously we have not done that well enough.
“At the moment we have opportunities in most of the world but we must do a better job in describing what the financial outlook is.”
Mulally sees the competition in European as “irrational behaviour” among manufacturers who have "failed to take capacity out".
“We were not going to chase market share to affect the value of these fabulous vehicles.” Trouble is, most people have got fabulous vehicles just now and buyers are clearly oblivious to all offers other than price.
Good thing the pantomime was on Friday. Everybody was able to go off for the weekend, grab a dose of reality and get over it.
But there will be consequences and Lewis Booth will be discomforted. The chief financial officer is 63 now which is actually younger than his 66 year old CEO, Mulally, whose appearance is a master class of eternal youthfulness.
Booth has been at Ford for 33 years, starting as a financial analyst. He had a number of financial responsibilities before being spotted as a bright star and moving into manufacturing. His high point in operations was to run Ford of Europe before he was dragged into the inner circle in Detroit by the Ford family and asked to run the books as well as sort out persistent losses in Europe.
His explanation of financial matters is not always sharp enough for the technical equity analysts. The quarterly financial conference calls have not allowed him to show the same mastery of his task that he had back in the days when he was running operations. He has always sounded as if he is on the back foot.
It would be a surprise if he wanted to go on. It would be more surprising still if the younger man option did not become attractive to the Ford main board.