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This is not shaping up to be quite the "year of execution" Ford Motor Co. CEO Jim Hackett promised. Amid a 57% slide in third-quarter net profits tied to its global restructuring, the automaker said Wednesday it is lowering its guidance for the year.

The Blue Oval expects higher warranty charges, higher-than-planned incentives and struggling sales in China to drag on profits through the end of the year, Ford officials said Wednesday. Ford expects to make between $6.5 and $7 billion in 2019; that could be lower than the $7 billion in profits before taxes the automaker made in 2018.

"We're experiencing more headwinds than expected in the fourth quarter," Hackett said. "Of course, we're disappointed in this."

The automaker made $425 million in the third quarter of 2019. Adjusting for roughly $1.5 billion in one-time charges associated with its global restructuring and the creation of a new joint venture in India, the automaker would have made $1.8 billion last quarter.

When adjusted for special charges, Ford reported it made 34 cents per share. That beat the expectations of 17 analysts who predicted Ford would report 26 cents per share, which would have been a 10% decrease compared to the same quarter a year ago. Ford shares slumped more than 2% in after-hours trading.

Hackett and his team said Wednesday that the $11 billion global restructuring and other cost-cutting initiatives, which have been underway for more than a year, are beginning to show results. 

Ford said it made $2 billion in North America, up 3% from a year ago. The automaker reported a 8.6% operating margin in the region, down slightly compared to a year ago. Ford lost $165 million in South America, lost $179 million in Europe, lost $27 million in the Middle East and Africa, lost $281 million in China, and lost $31 million in the rest of is Asia Pacific Operations. 

Still, the loss in China was a 26% improvement compared to a year ago. The automaker has cut loses in China nearly in half through the first nine months of the year compared to a year ago. Meantime, loses from the European operations were also down from a year ago.

Improvements in those regions are evidence of Hackett's plan at work, officials say. Lowered guidance could indicate that Hackett's plan has yet to take hold, but he and others said the automaker is adjusting for market shifts outside the company's control.

The automaker plans to spend more on incentives to sell its Ranger midsize pickup and Edge SUV in the fourth quarter. The automaker expects to see warranty costs increase as it atones for faulty vehicles rolled out by previous leaders, such as the since-cancelled Focus and Fiesta compact sedans. And the automaker is seeing unexpected headwinds in China as sales slow in that country.

But "the third quarter results do have evidence of the global redesign at Ford ... is driving positive shifts," Hackett said. 

The results came after the automaker reported sales through the third quarter of 2019 were down 3.5% as it continued to cut sedans from the lineup. But a slower-than-expected launch of the all-new Explorer and Lincoln Aviator have cut into sales and profits, too. 

Ford SUV sales were off 5% through the first nine months of the year. Sales of the Explorer, one of Ford's top-selling and most-profitable vehicles, were off nearly 30% in that time.

Ford Chief Financial Officer Tim Stone said that production volumes of the Explorer have reached the "levels we expect" after lagging through the second quarter. The automaker adjusted its full-year outlook because it expects to spend more on incentives through the end of the year to move vehicles in an increasingly competitive market, Stone said.

Another issue: Ford was too ambitious with the Explorer launch in Chicago, President of Automotive Joe Hinrichs said. Ford tried to launch the new product with a three-shift operation. But the automaker has largely overcome the slow start.

"We took on too much and we shouldn't have," Hinrichs said. "We actually feel really good where we are at right now." 

The automaker pledged more than a year ago to drive profits by exiting sedans to lean more heavily on SUVs and crossovers. It's early days of that transition; Ford is still selling a few sedans, and only recently launched the new Explorer, Aviator and Escape models. But Ford officials said in late 2018 that 2019 would be a year of results, results analysts say haven't come.

"Ford's under-performing SUV sales in the third quarter will negatively impact profitability, there is no doubt," said David Kudla, chief investment strategist at Grand Blanc-based Mainstay Capital Management in a statement. "This is not a vehicle segment you want to lose ground in the U.S. market. Ford will need a swift turnaround in the next few quarters to make up ground. GM and Fiat Chrysler are not sitting idly by."

Failure to deliver results in the near-term threatens to overshadow progress Ford leadership has made in setting the table for long-term success. That's a stark contrast to to problems that faced the guy Hackett replaced more than two years ago, former CEO Mark Fields, who was fired in part for lacking a clear path to the future despite driving the automaker to record profits in his time at the helm.

Since the start of 2019, Ford has announced partnerships with Volkswagen AG and India's Mahindra Group to boost performance outside the U.S. Ford also announced plans to develop an electric vehicle with Rivian Automotive LLC, and expand autonomous vehicle testing with Argo AI to Austin, Texas. Combined with the lineup turnover, those moves could combine to create a pivotal year if Ford is able to get production of the Explorer under control, analysts said.

"Ford has almost fully made its transition away from cars, but the company has yet to show that this gamble is driving sales in a meaningful way," said Jeremy Acevedo, senior manager of insights at Edmunds, in a statement. "All eyes are on Ford in the fourth quarter: if the company can't turn the corner with a stable of brand new SUVs right when shoppers want them most, there could be cause for concern."

ithibodeau@detroitnews.com

Twitter: @Ian_Thibodeau

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