Ford expects a $9B profit in 2017

Ian Thibodeau
The Detroit News

Ford Motor Co. expects its investments in autonomous vehicle technology, mobility services and other tech fields will be among reasons its profits will dip in 2017.

In a regulatory filing with the Securities and Exchange Commission, Ford said it expects to make an adjusted pre-tax profit of $9 billion in 2017, down from $10.4 billion last year.

The company also noted it expects first quarter 2017 earnings per share between 30 cents and 35 cents. That is lower than the first quarter of 2016, because of higher costs, lower volume and an unfavorable exchange, according to the filing.

In a Thursday call with investors, Ford Executive Vice President and Chief Financial Officer Bob Shanks said the company is still a good investment.

“We’re a strong global enterprise, we’ve weathered and we have thrived over the last seven years,” he said. “In 2017, we expect results again to be solid. ... We do expect the business to improve in 2018. That will be driven by improvements in core business.”

The 2017 profit will be lower due to “planned investments and emerging opportunities.” The company has said it plans to invest heavily in autonomous driving technology this year as it pushes to get a fully autonomous, driverless vehicle on the road by 2021.

In February, Ford announced it will invest $1 billion over five years in an artificial intelligence company, Argo AI, to develop the brains of its self-driving cars.

Shanks said the company can fortify its truck, van, SUV and performance segments, and transform its luxury and small vehicle segments to boost profitability over time in those segments. The company will be growing its electrification, autonomy and mobility segments, he said.

Ford will also have to adapt to any policy changes under the Trump administration, Shanks said, which could come as tax reforms, North American Free Trade Agreement renegotiations or new infrastructure demands.

But Shanks said Ford will continue to “transform” moving forward.

“We’ve been transforming this business pretty dramatically all the way back since 2005,” he said. “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. ... Everything is on the table, and it should be.”

Shanks was referencing the segments of the business Ford is looking to “transform.”

Before that call, analysts in notes to investors were split. George Calliers with Evercore ISI reiterated the company’s “preference for GM over Ford as a trade at this point in time.”

Itay Michaeli, global head of auto research with Citi, told investors to “remain neutral.”

Ford’s stock was trading around noon Thursday at $11.70 a share, down less than 1 percent.

Thursday’s outlook comes on the heels 2016 earnings that Ford said were its second best since 2000.

In 2016, Ford’s net income totaled $4.6 billion. The Dearborn automaker reported adjusted pre-tax income of $10.4 billion for the year, $200 million higher than its previous guidance, and the second best year since 2000.