Chief financial officer Bob Shanks spoke of a lack of fitness at the second-biggest US car maker
Out-of-shape Ford disappoints on earnings
Ford posted a lower than expected quarterly net profit, hurt by rising commodity costs and unfavourable currency exchange rates, and said it expects more pain to come from higher raw material prices in 2018.
The US car maker has been alone among the major automakers in warning that higher prices for metals like aluminium and steel will take a bite out of earnings, and last week its shares took a dive after executives said they could cost the company US$1.6 billion in 2018.
The firm's profitability has also been declining versus its peers. Ford's automotive operating margin for the quarter fell to 3.7 per cent, from 5.7 per cent a year earlier.
Ford said last week cost-cutting measures such as streamlining its model line-up and slashing marketing costs would help boost its profit margins.
Speaking to reporters at Ford's suburban Detroit headquarters, chief financial officer Bob Shanks spoke of a lack of fitness at the second-biggest US car maker, which meant that higher commodity costs stood out more than at rival companies that are hitting their numbers.
"We have to be far fitter than we are, regardless of what the future is," Mr Shanks said, alluding to a previously announced plan to slash $14bn in costs over the next five years.
Ford's battle to improve its margins comes during a declining US market for new vehicles. US sales fell 2 per cent in 2017 after hitting a record high in 2016 and are expected to drop further in 2018 as interest rates rise and more late-model used cars come back to dealer lots to compete with new ones.
The car maker's shares hit a 12-month high on January 16, the same day it gave a disappointing outlook after the market. Since then, the company's shares have fallen more than 10 per cent.
That decline is a "report card on our fitness," Mr Shanks said.
Rival General Motors gave a Wall Street analysts a more positive outlook last week, and year to date its shares are up almost 8 per cent.
Ford's fourth-quarter results were driven almost entirely by North America, which accounted for $1.6bn out of $1.7bn of pre-tax profits.
The company sold more expensive and profitable vehicles, mainly pickup trucks and 4x4s, in North America than in other markets.
Mr Shanks said that around two thirds of the $400 million currency exchange hit the company took in the quarter was related to Brexit in Europe.
Ford reported quarterly net income of $2.41bn or 60 cents per share, versus a loss of $781 million or 20 cents per share a year earlier. Adjusted for one-time items, Ford reported earnings per share of 39 cents. On that basis, analysts had on average expected earnings per share of 42 cents.
Automotive revenue for the quarter rose to $38.5bn from $36bn in the final quarter of 2016. Analysts had on average expected revenue for the quarter of $37bn.