Ford Motor Co. (IW 500/3) reported profit for 2018 that trailed estimates, though it sees a chance that revenue and earnings will improve this year as it shifts away from sedans to more profitable trucks and sport utility vehicles.
Adjusted profit last year was $1.30 a share last year on a preliminary basis, below analysts’ average projection for $1.32. There’s potential for improvement on revenue, earnings before interest and taxes and adjusted operating cash flow in 2019, Chief Financial Officer Bob Shanks said in a statement.
Ford is abandoning the traditional sedan market in the U.S. and rolling out a range of SUVs, including the redesigned Explorer, and expanding its line of trucks by reviving the midsize Ranger. Chief Executive Officer Jim Hackett is in the midst of an $11 billion restructuring of the company and also plans to spend a combined $15 billion in the coming years developing electric and self-driving vehicles. The company announced an alliance Tuesday with Volkswagen AG to develop commercial vehicles such as delivery vans and pickups.
“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,” Hackett said in a statement released ahead of a Deutsche Bank auto conference in Detroit.
Ford shares fell as much as 3.3% to $8.55 Wednesday before the start of regular trading. The stock plunged 39% last year.
Shanks said 2018 results included a non-cash pretax loss of $877 million in Ford’s global pension funds due to declining financial markets late last year. The automaker’s pension funds remain fully funded, he said.
Revenue rose 2% to $160.3 billion last year, according to slides posted ahead of the analyst conference. Adjusted EBIT fell about 27% to $7 billion, mainly due to Ford’s struggles in China and Europe.
In North America, Ford has set a “Return to 10” objective for its profit margin, which was 7.9% last year. To get back into double digits, the company is cutting an unspecified number of salaried workers to trim costs, according to the slides.
By Keith Naughton