Sliding vehicle sales and the ongoing in investment in mobility enterprises are going to cut Ford Motor Co. profits by 50% and reduce full-year profits by nearly $1.5 billion.
The assertions were made by Ford executives during investor conference calls and in filings with the Securities and Exchange Commission.
The company noted it expects first quarter 2017 earnings per share between 30 cents and 35 cents, which equates to just under $1.9 billion and lower than the first quarter of 2016. Last year, the automaker earned 68 cents per share for the first quarter and had a record quarterly pre-tax profit of $3.8 billion: One of its best quarters ever.
The pinch will cause pre-tax profit to fall to $9 billion for 2017 from $10.4 billion last year, just as Ford suggested would happen in its January forecast. The drop from last year will be due, in large part, from rising material costs and the maker’s substantial investment in its mobility initiatives.
Much of that is related to its effort to put a self-driving vehicle on the road by 2021. For example, the company is plowing $1 billion during the next five years into Argo AI, which will help develop the processing capability of those vehicles.
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Executives expect to continue taking a hit on car sales compared with the increases enjoyed by trucks and utility vehicles in general. Ford CFO Bob Shanks said he expected 2018 to be a better year financially than 2017.
“We think we can do more with trucks, we think we can do more with utility vehicles, we can do more with performance and we’ve got plans in place to do that,” Shanks said. “We think this can lead to an even stronger position for us in the years ahead.”
The company predicted U.S. auto sales in this year will fall slightly to 17.7 million units, down from a record of 17.9 million in 2016. The company said sales should hit 17.5 million in 2018.
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Shanks reiterated the company’s ongoing mantra of that it will take on policy changes enacted by the Trump administration as they come, especially as it related to the North American Free Trade Agreement.
He said Ford has been a company transforming for more than a decade and adapting to the new administration’s potential trade policies is just one more bump in the road.
“We’ve been transforming this business pretty dramatically all the back since 2005,” he said during the call.
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“We are working on different business models, we’re looking collaborations, we’re looking at traditional restructurings, we’re looking at rethinking the construct of the business.”
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