After five consecutive years of losses, Ford Motor Co. expects to turn a profit in Europe, Ford chief executive officer Mark Fields said.
“We are going to be profitable in Europe in 2016,” he said. “We are not pulling out of Russia. We think when the economy comes back, Russia will be a good market for us.”
Fields told the Automotive News World Congress that Ford was making steady progress towards key goals of steady growth and profitability despite losing marketshare in North America. “The economic conditions in the U.S. are going to be very favorable (in 2016),” the Ford CEO said. “Interest rates are low, Energy costs are low.”
Along with other shares during what was a route on Wall Street, Ford’s stock fell on Wednesday 65 cents per share despite the company’s promise to return $1 billion to shareholders through dividends. The value of Ford shares is also down by nearly one third since Alan Mulally, the former Ford CEO, who guided the company through the steep recession of 2008 –2009 was replaced by Fields in July.
(Click Herefor details about Ford’s potential earnings growth.)
Adam Jonas, managing director of Morgan Stanley, said investors are wary of what will happen to Ford during an economic downturn. In addition, they are concerned about the kind of sweeping changes or disruption that traditional auto companies face from technical change. When asked point blank on his recommendation on Ford share, Jonas said he would recommend selling them.
Fields insisted Ford is preparing for the future with a strategy that maintains the health of its core business and looks for ways to build up the other part of its business such as mobility services. “We’re trying to disrupt ourselves,” he said.
After the speech, he disagreed with Wall Street’s evaluation of Ford’s strengths. Ford did go through a serious crisis during the last recession, but didn’t have to turn to the government for help, he said.
The only effective way to impress Wall Street will be for Ford to grow and grow profitably, he said. Fields also said he was open to partnering with a Silicon Valley company, such as Google. But the substance of any discussion will have to be kept private for now.
(Ford finds way to boost bottom line by $1.5 bil. Click Here to learn how.)
“As we close out 2015, we are benefiting from six consecutive years of consistently strong results, and our performance is allowing us to reward our shareholders,” said Fields. As a result of the company’s performance in 2015, Ford’s Board of Directors declared a first quarter dividend of 15 cents per share and a $1 billion supplemental cash dividend that is equal to 25 cents per share. The first quarter regular dividend maintains the same level as the dividends paid in 2015.
The $1 billion supplemental cash dividend reflects the company’s strong financial performance in 2015 and robust cash and liquidity levels, and is about a 40% addition to the regular dividends paid in 2015. The first quarter and supplemental dividends are payable on the company’s outstanding Class B and common stock on March 1, 2016, to shareholders of record at the close of business on Jan. 29, 2016.
Looking forward, Ford expects to sustain its strong financial performance in 2016 – with automotive revenue equal to or higher than 2015, automotive operating margin equal to or higher than 2015 and strong Automotive operating-related cash flow. The company expects its 2016 pre-tax profit, excluding special items, to be equal to or higher than 2015, and its operating earnings per share to be about equal to or higher than 2015.
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“In 2015, we achieved a breakthrough year as promised,” said Fields. “For 2016, we’re looking forward to delivering another outstanding year.”