Ford CEO Jim Hackett said the company has laid the groundwork for its end goal of producing nothing by smart vehicles.
Ford Motor Co. today reported Q4 net income of $2.4 billion, or 60 cents per share, on $41.3 billion in revenue and full-year results of $7.6 billion in net income on revenue of $156.8 billion.
The company’s pre-tax profit for the final quarter of 2017 was $1.7 billion, or 39 cents per share on an adjusted basis. The results were lower than Zacks and Thomson Reuters consensus estimates of 42 cents per share adjusted.
For the full year, the company’s pre-tax profit was $8.4 billion, or $1.78 per share. Again, that was lower than Thomson Reuters analysts’ estimate of $1.83 per share. The net income of $1.90 per share was also lower than what the automaker has predicted it would be a few weeks ago. It said it would be $1.95 per share.
“In 2017, we made tremendous progress in laying the foundation for our strategy – smart vehicles for a smart world – from accelerating our connected vehicle plans to expanding our AV and EV work,” said Jim Hackett, president and CEO, in a statement.
(Hackett tells analysts Ford cutting car production. Click Herefor the story.)
Ford's overall profits were hurt by increases in the price of commodities, the company said.
“As we move into 2018, we are intensely focused on improving the operational fitness of our business to deliver strong results while continuing to build toward our vision of the future.”
Hackett’s reference to improving the company’s “operational fitness” is likely a reference to improving its financial results in its two largest markets: North America and China. Despite a 3% increase in revenue for 2017, driven by average transaction prices that were up $1,300 for the year, the company’s market share remained flat at 13.9% and its operating margin drop 1.7 points to 8%.
The company attributed the drop to the launch of the Expedition and Navigator and higher commodity and warranty costs. However, despite that less than expected result, it was the North American market that drove almost all of the company’s profit at $7.5 billion for the full year.
(New high performance EV to highlight Ford’s $11B electrification program. Click Here for the story.)
In Asia, where the Lincoln brand enjoyed a record year in China, the company saw similar results to North America: increased revenue, but drops in market share (0.3 points) and operating margin of 1.2 points down to 4%. The company pointed to lower volumes and pricing in China on its Ford-brand products.
The company’s operations in South America and the Middle East/Africa were all money losers in 2017 and though Europe did turn a profit, all three regions posted results that were worse than in 2016, according to the automaker.
Overall, the company spent more to make profit with its 5% operating margin coming in substantially lower than its 2017 target of 8%. Unfortunately, 2018 doesn’t appear to be much better with Ford predicting an adjusted EPS in the $1.45 to $1.70 range.
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Ford Credit, the company’s captive finance arm, reported pre-tax profits of $2.3 billion, up 23% from from a year ago. Additionally, Ford’s automotive revenue rose slightly to $145.7 billion despite global sales being flat at 6.6 million cars and trucks.