Ford has booked a substantial US$2.8bn plunge in full year 2016 net profit down to $4.6bn on sales down to $151.8bn from $2.2bn. Automotive segment operating margin was off 0.1% to 6.7%.
The automaker said the fall was due to $3.0bn of fourth quarter (Q4) “pre-tax pension remeasurement”. Full-year adjusted pre-tax profit fell “slightly” ($0.4bn) to $10.4bn.
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The blue oval also booked an $0.8bn Q4 net loss – down $2.7bn year on year – on sales down $1.6bn to $38.7bn while adjusted pre-tax profit was off $0.5bn to $2.1bn.
Full year vehicle unit sales were up 16,000 to 6.7m worldwide and down 68,000 to 1.7m in Q4.
Ford chairman and CEO Mark Fields said in a statement: “We achieved a solid 2016 net income of $4.6bn as well as an adjusted pre-tax company profit of $10.4bn, which was our second best ever – building on the all-time record we had set the year before. This underscores the substantial progress we are making in expanding our business to be an auto and a mobility company.”
Drilling down to the individual regional automotive segment results, North America full year pre-tax profit slipped $344m to $9bn on sales up $0.7bn to $92.6bn and unit volume was down 54,000 to just over 3m.
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By GlobalDataEurope – until recently, long a disaster zone for Ford – saw a $946m hike in 2016 net profit to $1.2bn on sales up $0.3bn to $28.5bn and unit volume up 9,000 vehicles to over 1.5m.
South America remained the major new problem area with pre-tax results down $277m to a loss of $1.1bn as sales fell $1bn to $4.8bn and unit volume dropped 56,000 to 325,000. Ford cited the “economic environment” but said, in the fourth quarter, “all key metrics [were] up for the first time since 3Q 2013; wholesales were up 13% year over year and revenue was up 18%. For 2017, [we] expect [the] loss to improve as a result of improving market factors as the economy begins to recover.”
In the Asia-Pacific region, where Ford once operated in partnership with Mazda, sharing vehicle models, but now goes it alone, it booked its second-best full-year pre-tax profit of $627m (down $138m) after sales rose $1.3bn to $12bn and unit volume rose 143,000 to 1.6m. Ford noted 4Q market share in China rose two-tenths of a percent to 5.2% due to new model launches.
The automaker said Q4 and 2016 were both “challenging” in the Middle East and Africa where the full year pre-tax loss was $302m (down $333m) on sales off $0.4bn to $3.6bn as unit volume fell 26,000 to 161,000.
Ford Credit pre-tax profit fell $207m to $1.9bn in 2016. The automaker forecast $1.5bn for 2017 due to expected lower US auction values.
CFO Bob Shanks said in the statement: “The strength of our full-year results across so many parts of the business was really encouraging. We had a solid net income, although lower than last year because of our pension re-measurement. We achieved the second-best company adjusted pre-tax profit, auto operating margin and auto operating cash flow. We also delivered an improved combined profit at our business units outside North America, and ended the year with a robust balance sheet. In addition, we’re pleased to have distributed $3.5bn to shareholders last year with a plan to provide another $2.8bn in 2017.”
For this year, Ford expects: “Consistent with previous guidance, 2017 company outlook [will be] generally lower than 2016, driven by investments in emerging opportunities.”
Karl Brauer, an analyst at Autotrader and Kelley Blue Book, said in a note to media: “Like most automakers, Ford is struggling to sell cars while enjoying healthy truck, van and SUV demand.”
He described as “intriguing” the potential for future growth under the new Trump administration where fuel costs and mpg regulations are likely to support the continued sale of larger, high-profit vehicles.
“Combined with Ford’s momentum in Europe and China, the automaker is positioned to succeed in 2017 and beyond.”
Rebecca Lindland, senior analyst for Kelley Blue Book, added: “There is substantially encouraging news out of Ford in the revenue and profit front but a few red flags, such as incentive spend and heavy reliance on pickups and SUVs in the US.
“The news globally is quite positive. If Lincoln continues accelerated growth in China, it could be a boon for the brand and the company and spawn additional products both in the US and China.”
In-depth coverage and analysis of Ford (and other automakers) can be found on just-auto’s QUBE database. Product life data is covered by PLDB
