Ford Posts Best Annual Result in Decade, Sets 13 Weeks of F-Series Downtime

Ford recorded an $8.6 billion pre-tax profit in 2013, up $603 million from 2012 and marking its best showing in more than 10 years.

“These full-year results reflect an automotive sector that was highest in more than a decade,” Ford CEO Alan Mulally says today in a conference call with analysts and media. “(And) our One Ford plan continues to deliver profitable growth around the world – 2013 was an outstanding year.”

Ford's automotive sector contributed $6.9 billion of the $8.6 billion full-year profit. Ford's financial services sector accounted for the remaining $1.7 billion.

The full-year results came despite a drop in total fourth-quarter earnings to $1.3 billion, off $402 million from like-2012, a decline the Dearborn, MI-based automaker blames on higher costs and lower pricing.

Still, Mulally calls the quarter “solid...with market-share gains both in the U.S. and Asia-Pacific and Africa, where we realized record share.”

In China, Ford saw share grow to a record 4.4%, a gain driven largely by EcoSport and Kuga demand.

Ford’s $8.8 billion pre-tax full-year automotive-sector operating profit in North America will allow it to distribute profit-sharing checks of $8,800 per hourly worker. But the company ended the year with a $200 million reduction in Q4 automotive earnings, mainly due to higher structural and warranty costs, including those associated with a recall of the Escape CUV's 1.6L EcoBoost engine.

And its outlook for this year in North America is tempered by extended F-Series plant downtime, as the automaker tools up for a heavily revamped, aluminum-intensive new model.

Ford's full-year pre-tax profit would have been stronger if not for losses of $1.6 billion in Europe and $34 million in South America.

The automaker remains hopeful it will return to profitability in Europe next year.

Last year about 40% of Ford's sales in Europe were new products.

"We're very encouraged by the response to them and our dealers are feeling more encouraged," Chief Operating Officer Mark Fields says, pointing out more than 2,500 dealers in the region have agreed to upgrade their facilities over the next two years.

South America results continue to be tempered by Argentina and Venezuela, where “unclear economic policy direction” is keeping a lid on industry volume, Mulally says.

Ford posted a fourth-quarter pre-tax loss in South America of $126 million due to plant downtime in Brazil to prepare for 2014 launches and lower production in Venezuela.

"We've been in this situation before," CFO Bob Shanks says, noting Ford has been in Argentina for 100 years.

The automaker expects 2014 profits in North America will fall from the $8.8 billion in 2013 due to the launch later this year of its highest-volume model in North America, the new F-150.

Mulally says the Dearborn truck plant will shut down for 11 weeks and its Kansas City, MO, operation will be idled two weeks, for a total of 13 weeks of downtime.

Shanks says Ford also will "see pressure from a higher mix of smaller vehicles, the pressure from increasing costs to meet regulatory requirements and we're building into '14 a tougher pricing environment" due to a weaker Japanese yen.

For full-year 2014, Ford forecasts a pre-tax profit of $7 billion-$8 billion, assuming industry volume in the U.S. of 16 million-17 million units, up from 15.9 million in 2013. In Europe, the automaker projects industry sales of 13.5 million-14.5 million new vehicles, compared with 13.8 million in 2013.

China's market should grow this year, thanks to efforts by the government to improve consumption, Mulally says. Ford forecasts sales of 22.5 million-24.5 million vehicles, up from 22.2 million in 2013.

[email protected]