Ford's Operating Income Falls by Two-Thirds -- 2nd Update

By Mike Colias 

Ford Motor Co. said fourth-quarter operating income sank by two-thirds, and it issued a lower-than-expected profit outlook for 2020, the latest signs of trouble for Chief Executive Jim Hackett's turnaround plan.

Ford said operating income for the October-to-December period was $485 million, down from $1.5 billion a year earlier. Earnings per share adjusted for one-time items were 12 cents, well short of analysts' estimate of 17 cents a share.

Ford pinned the shortfall in part on lower production volumes in North America stemming from problems with launches of key models, including the redesigned Explorer and Escape sport-utility vehicles and its Super Duty pickup truck. It also cited higher warranty costs and a bonus payout to United Auto Workers that totaled about $600 million.

Ford booked a net loss of about $1.7 billion for the quarter which it attributed to losses from higher contributions to its pension plans overseas. Revenue fell 5%, to $39.7 billion.

Ford shares fell more than 10% in after-hours trading. They are flat for the year, closing at $9.17, and down about 17% since Mr. Hackett took over as CEO in May 2017.

The results capped a disappointing year for Ford, in which its net income fell to just $47 million -- down from $3.68 billion in net income a year earlier -- mostly due to restructuring costs in Europe and adjustments to global pension plans.

Revenue for the full year fell 3% to was $155.9 billion.

The auto maker forecast earnings per share this year in the range of 94 cents to $1.20, lower than the average estimate of $1.30, according to S&P Global Market Intelligence.

"Financially, it wasn't OK," finance chief Tim Stone said of the 2019 results during a discussion with reporters at Ford's headquarters. "Strategically...I think we made strong progress."

Nearly three years into the top job, Mr. Hackett's strategy to revitalize Ford -- which includes a multiyear, multibillion-dollar restructuring -- hasn't returned the company to earnings growth or restored profitability overseas, where Ford is closing plants and shedding thousands of workers to cut costs. Ford's operating profit has fallen in both full years of his tenure.

This year "will be crucial for Ford, as it must show better results" from Mr. Hackett's revitalization plan, Credit Suisse analyst Dan Levy wrote in an investor note Tuesday. "Ford must start meeting/exceeding investor expectations to reinvigorate investor interest."

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(END) Dow Jones Newswires

February 04, 2020 17:08 ET (22:08 GMT)

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