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Ford Motor Company executives appear ready for 2014 to be over and are already looking to next year, when they hope new products - including their biggest bet, an aluminum-bodied F-150 pickup truck - will bolster the company's earnings.
Ford's third-quarter profit, announced on Friday, was $1.2 billion before taxes, down $1.4 billion compared with a year ago. Net income was $835 million, a decrease of $437 million compared with a year ago.
Mark Fields, the automaker's president and chief executive, called this year "more of a pit stop" as the company aims to position itself for growth in 2015 and beyond. He acknowledged that "the third quarter was challenging," in a conference call with investors Friday.
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Excluding one-time costs, Ford's earnings were 24 cents a share for the quarter, down considerably from last year's. But Ford executives took comfort that they beat Wall Street analysts' expectations, which had predicted the company would earn only 19 cents a share.
The automaker predicted it would earn $6 billion in pre-tax profit for all of 2014 but said it expected to top $8.5 billion in 2015.
Perhaps no product is as important to whether Ford will hit that number as the F-150 pickup. It was long the best-selling vehicle in America, but Ford took the significant step of redesigning its flagship truck with an aluminum body to save weight and improve fuel economy. It will begin arriving at dealerships in December. The change required a lengthy shutdown of its truck plant in Dearborn, Michigan, to retool, and the company is working with dealers and body shops to train them on the differences inherent in repairing aluminum.
"It is hard to overstate the importance of the F-150 to Ford's overall health. Perhaps more than any other brand, Ford relies on its iconic truck to drive sales volume and its bottom line," said Eric Ibara, senior analyst at Kelley Blue Book. "So while it may win a lot of awards and generate more than its fair share of media buzz, Ford placed a huge bet on its redesign, and the outcome of that bet may be unknown for a while."
In North America, home of the F-150, Ford's third-quarter revenue was down six per cent and sales to dealers down eight per cent, which the company attributed largely to the plant's five-week shutdown during the quarter. Ford's overall operating cash flow was negative $700 million for the quarter, for the same reason. (Global revenue was down two per cent, with sales down three per cent.)
"Everyone knows how profitable the F-150 is to the company," said Bob Shanks, Ford's executive vice-president and chief financial officer. Once the aluminum truck begins selling, he said, "we expect it to contribute significantly to the bottom line."
Fields, the chief executive, echoed that sentiment and said plans for the F-150's introduction were progressing well. "We now have started mass production," he said. "The plant is off and running."
In addition to issues tied to the F-150, two other factors affected quarterly earnings. The difficult market in South America, as well as currency exchange issues there, continued to weigh on Ford, as it has on other global automakers. But Ford also had higher-than-normal warranty costs, primarily because of recalls in North America.
The company reported more than $600 million in charges related to warranty costs in North America in the third quarter, nearly all of it tied to recalls.
In September, it recalled about 745,000 sedans and sport utility vehicles in the United States for a problem that could prevent the airbags from deploying in a crash, including C-Max, Fusion, Escape and Lincoln MKZ models.
Looking ahead, Fields said he disagreed with any notion that the auto industry could plateau after what has been a strong sales year. "We expect this to be a growth industry," he said.
©2014 The New York Times News Service
