Ford expects record ’15 pre-tax profit, strong ’16

Michael Martinez
The Detroit News

Nearly a decade after Ford Motor Co. mortgaged nearly every part of its company — including the iconic Blue Oval itself in a fight for survival — the automaker is poised to make the most money in its 112-year history.

Ford on Tuesday said it expects a record pre-tax profit in the upper half of its expected $10 billion-$11 billion range, and that it thinks 2016 will be “equal to or higher.”

President and CEO Mark Fields made the news Tuesday evening at a presentation at the annual Deutsche Bank Global Auto Industry Conference to analysts and investors.

“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,” Fields said.

“This pattern of strong returns gives us a great platform to build on as we enter the year with a focus on strengthening our core business and engaging aggressively in emerging opportunities through Ford Smart Mobility.”

As part of the announcement, Ford declared a $1 billion supplemental cash dividend — or 25 cents per share — in addition to a first-quarter regular dividend of 15 cents per share. The dividends are payable on March 1 to shareholders of record at the close of business by Jan. 29.

Ford stock fell sharply — about 3 percent — in after-hours trading immediately after the news was announced. Fields told The Detroit News last week that the automaker’s stock performance was “frustrating.”

“We have to continue to focus on the key elements that drive stock price, and that’s revenue growth, operating margin expansion and a healthy dividend that’s sustainable through an economic cycle,” he said last week at the CES technology trade show in Las Vegas. “We’re doing that and we’re going to keep working at it. At some point, I’m confident we’ll get rewarded for that.”

Fields said the automaker returned to profitability in Europe last year for the first time since 2011. Originally, Ford said it expected to be profitable there by 2015, but later revised that statement and said it expected to lose money there in 2015.

Ford has closed plants and slashed jobs in that part of the country as it reorganizes its business model.

In 2015, Fields said Ford’s wholesale vehicle volume was the highest since 2005, its automotive revenue was the highest since 2007 and its market share was up 0.2 percentage points to 7.3 percent.

Ford launched 16 new vehicles in 2015, and the company plans 12 more launches this year, including the GT supercar and Lincoln Continental flagship sedan. Fields said this year that about 45 percent of Ford’s wholesale volume will be from products launched since the beginning of 2015.

Ford expects an “outstanding” 2016, Fields said, with operating margin of 9.5 percent or higher for North America and profitability in all business units except South America, where it expects a greater loss than in 2015.

Results for Europe and Asia Pacific are expected to improve over 2015 and results for the Middle East and Africa are expected to be about equal to or more than last year. Ford Credit’s pre-tax profit is expected to be equal to or more than it was in 2015.

Fields said Ford expects 2016 U.S. auto sales to come in between 17.5 million and 18.5 million vehicles, including medium and heavy-duty trucks.

The automaker will report its 2015 earnings Jan. 28.

“In 2015, we achieved a breakthrough year as promised,” Fields said. “For 2016, we’re looking forward to delivering another outstanding year.”

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