Ford has posted disappointing fourth quarter results that included a loss that virtually wiped out its profit for 2019.
The company reported a hefty USD$1.7bn loss in Q4, hit by a USD2.2bn special charge related to accounting for pensions and other retirement benefits. Tim Stone, Ford’s chief financial officer, also said product launch costs for Super Duty trucks and the Escape contributed to the scale of Ford’s fourth quarter loss.
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The heavy Q4 loss left the company with only USD84m in net income for the year, a sharp drop from its USD3.7bn profit in 2018.
Operating income in autos was also much lower in Q4. Ford’s Automotive EBIT for the quarter was USD215m, 81% lower. Ford said gains in net pricing and product mix, particularly in North America, were more than offset by lower launch-related volumes; higher costs for new products; unfavourable currency exchange; and UAW contract-related costs.
Ford’s Automotive EBIT for the year was USD4.9bn, USD0.5bn down on 2018.
Ford is also restructuring operations and CEO Jim Hackett said he is pleased with progress so far, but he also acknowledged that operational execution was ‘not nearly good enough’ last year.
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By GlobalData“We made great strategic progress this past year with a fundamental redesign of Ford that is setting us up to compete and win in this emerging era of Smart Vehicles for a Smart World – with great products, services and long-term value,” said Hackett.
He added in a statement: “Financially, the company’s 2019 performance was short of our original expectations, mostly because our operational execution – which we usually do very well – wasn’t nearly good enough. We recognise, take accountability for and have made changes because of this.”
In terms of EBIT, Ford posted losses in all regions except North America (where profit was USD6.6bn – see data table below). In China, Ford lost USD771m last year, including USD207m in the fourth quarter (although that was an improvement over 2018). The company said it is too soon to say what the impact of the coronavirus outbreak will be on its operations in China.
Despite making an annual loss, Europe showed a sharp improvement last year and chalked up a small USD21m profit in Q4.
There was little cheer in the immediate outlook. Ford said in the first quarter, it expects adjusted EBIT to be down more than USD$1.1bn from Q1 2019 as a result of the continuation of higher warranty costs seen during the second half of 2019, lower vehicle volumes, lower results from Ford Credit, and higher investment in mobility.
For 2020 Ford expects adjusted EBIT of USD5.6bn-USD6.6bn, which assumes ‘at least nominal growth in the Automotive business, offset by lower EBT from Ford Credit and modestly higher investment in mobility’.
