Ford Struggles In Fourth Quarter

Ford Motor Company’s (NYSE: F) latest earnings report shows that the company struggled against numerous headwinds in the fourth quarter. Costs related to vehicle launches and a new labor contract helped drag the carmaker to a fourth-quarter loss. A troublesome launch of the redesigned Explorer sport-utility vehicle weighed on sales volume and resulted in an increase in warranty costs in North America. A previously announced $2.2 billion charge on pensions also impacted the quarterly results.

Ford said it lost $1.7 billion, or 42 cents a share, in the quarter, compared with a loss of $100 million, or 3 cents a share, in the year-ago period. On an adjusted basis, Ford posted a profit of 12 cents a share, missing analysts’ estimate of 15 cents. Revenue fell 5 percent to $39.7 billion from $41.8 billion a year ago. Analysts had expected revenue of $39.6 billion.

Ford missed its full-year guidance of $6.5 billion to $7 billion in earnings before interest and taxes, reporting $6.4 billion for 2019. Chief Executive Jim Hackett said 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 recognize, take accountability for and have made changes because of this.”

Ford’s sales in China, its most important market after North America, fell 38 percent in the fourth quarter, dropping to $1 billion. The company lost $771 million in China last year, including $207 million in the fourth quarter. Hackett said it was too early to estimate implications of the coronavirus outbreak in China on its bottom line this year.

Ford is a year and a half into a global restructuring project intended to improve profits and accelerate its development of electric and self-driving cars. The company said it spent $3.2 billion on its restructuring in 2019, including $900 million in cash. An additional $900 million to $1.4 billion will be spent for the restructuring in 2020, including between $800 million and $1.3 billion in cash.

For the first quarter, Ford said it expects adjusted earnings to be down more than $1.1 billion from the first quarter of 2019. The company is forecasting $5.6 billion to $6.6 billion in adjusted earnings before interest and taxes for the current year. It expects an adjusted profit of 94 cents to $1.20 a share.