Ford Motor Co. CEO Jim Hackett said Wednesday that the behind-the-scenes work he and his executive team have been doing in the 19 months since he was appointed to lead the company should start to pay off this year.
Ford expects financial results in 2019 should be an improvement over the year prior. The automaker reported it made 92 cents per share in 2018 — down from $1.90 per share in 2017.
The automaker presented the 2019 outlook during the Detroit auto show. Ford's top executives explained the expectations to investors at the 2019 Deutsche Bank Global Auto Industry Conference on Wednesday in Detroit.
Hackett, chief financial officer Bob Shanks and president of global markets Jim Farley said their plan took effect in 2018, and will begin to boost the bottom line in 2019 as cost-cutting and restructuring continues.
Ford is in the middle of a sweeping global restructuring as it readies for a new chapter in the automotive industry. Under Hackett, Ford's senior leadership is pushing to trim $25.5 billion in operating costs over the next five years and spend $11 billion to shake up failing businesses in Europe, China and South America, and better position the automaker's North American business for continued profitability through the next decade.
"We're really confident in our plan to redesign our business," Hackett said. "We are moving. We are moving right now. We have clear direction, focus, a sense of urgency."
The automaker's preliminary 2018 results are line with the full-year guidance the company adjusted mid-year last year due to a worse-than-expected performance in China. Ford expects to have finished 2018 with an adjusted-earnings per share of $1.30, as well as $23.1 billion in cash and liquidity of $34.2 billion. The automaker declared a first-quarter regular dividend of 15 cents per share.
Ford stock has fallen from around $13 at the beginning of 2018 to around $9 now. Shares slid around 2 percent in pre-market trading Wednesday.
But Ford officials stressed a positive outlook for 2019 despite expected significant trade and tax headwinds.Farley told investors about Ford's product gambit planned over the next 24 months in North America, during which it will refresh 75 percent of its product portfolio as it shifts spending to devote 96 percent of its product capital to trucks and SUVs.
He outlined the company's plan to capitalize globally on its strong commercial vehicle business. Ford's global commercial business generates $72 billion in revenue and roughly $10 billion in earnings before interest and taxes. It operates at a 14 percent margin; by comparison, Ford is pushing to get its entire North American business back to a 10 percent operating margin. In Europe, Ford is targeting 6 percent.
Farley said Ford is moving to extend its lead in the pickup truck market in the U.S. The automaker has a hybrid F-150 coming to market. Later this month, Ford will debut an all-new Super Duty pickup, he said.
Officials announced last week announced plans to revive its unprofitable European business by cutting salaried and hourly workers, ending production at plants in France and Germany, eliminating less-profitable vehicles like the C-Max from the lineup there, and possibly exiting a Russian joint venture. Farley will outline the automaker's plan to focus on commercial vehicles there while it corrects the rest of the business.
Ford on Tuesday said it had entered an agreement with Germany's Volkswagen AG to partner on commercial vans and midsize pickups to be sold outside of North America. The partnership is aimed in part at boosting Ford's European business.
In China, the automaker plans to debut 10 new Ford and Lincoln vehicles this year, contributing to a total of 30 new products by 2021. Meantime, the automaker plans to reduce administrative headcount by 20 percent in South America this year, according to a news release.
Meantime, Shanks said in a statement that despite rising commodity costs, unfavorable exchange rates and on-going trade disputes, Ford will have positive operating results. The 15 cents per share dividend will be payable March 1 to shareholders of record at the close of business Jan. 31.
Shanks said 2018 was an important year for the company. "We made many important strategic choices, and we began to take actions that will fundamentally redesign our business. 2019 is about action. Implementation. A year where our thinking about the future of Ford, the fundamental design of the business, our capital allocation choices, our fitness, who we choose to partner with and why become increasingly clear."
The finance chief expects revenue, earnings and operating cash flow to improve on a year-over-year basis in 2019. At this time last year, Shanks and Hackett provided a grim outlook for 2018.
Ford will report fourth-quarter 2018 and full-year earnings results Jan. 23.