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January 16, 2019

Ford cautious on 2019 outlook

In a presentation at the Deutsche Bank Global Auto Industry Conference in Detroit, Ford has cautioned on the 2019 outlook citing risks associated with the global trading environment as well as higher commodity costs. 

By Sam Duke

In a presentation at the Deutsche Bank Global Auto Industry Conference in Detroit, Ford has cautioned on the 2019 outlook citing risks associated with the global trading environment as well as higher commodity costs. 

While Ford said it sees the potential for higher operating earnings this year, Chief Financial Officer Bob Shanks said he sees the volatile US trade policy environment and uncertainty around the UK’s  planned exit from the European Union as factors that could impact its performance in 2019. Ford leads the market in the UK, so a shock to the UK economy would impact its performance in a region where it is already making losses and preparing extensive restructuring measures to reduce costs.

“Until we see how some of these things begin to play out we want to be a little prudent in terms of how specific we are,” Shanks said. “But do we think we should improve the business this year? Absolutely.”

Ford also cited headwinds including tariffs and high commodity costs which impacted its 2018 earnings and will remain in 2019. Shanks said Ford estimates US-China tariffs and higher metals costs to take around USD700m off the company’s bottom line in 2019. He also cited higher warranty costs in North America.

In presentations, Ford also highlighted its commitment to reinvent the future of mobility by transforming the company through operational fitness and allocating capital to high-growth and high-margin product segments and smart vehicles and services.

“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. These actions support our drive to satisfy today’s customers – and those of tomorrow,” said Jim Hackett, president and CEO.

Jim Farley, president, Global Markets, shared some details of the company’s global product actions, which focuses on trucks, commercial vehicles and SUVs.

“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, including Territory in China, Bronco, and a slightly smaller, yet-to-be named off-roader in North America,” Farley said. “2018 was a growth year for F-Series, especially Super Duty in North America. Transit and Ranger are now in all global markets in high volume with great potential.”

He added: “We are bolstering our portfolio to capture a healthy share of higher growth and higher profit segments and partnering where appropriate to improve profitability and returns. I’m very confident in our plan and our ability to execute.”

For full-year 2018, the company announced preliminary EPS results of USD0.92, and adjusted EPS of USD1.30 – in line with the company’s most recent guidance. The company ended the year with a strong balance sheet, with cash of USD23.1 billion and liquidity of USD34.2 billion.

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