Created: 01/29/2015 3:21 PM WNYT.com
By: By DEE-ANN DURBIN
DEARBORN, Mich. (AP) — Ford Motor Co. is putting a tough year behind it and promising big things despite a bumpy global market.
The Dearborn-based automaker's net income fell 56 percent to $3.2 billion in 2014. Sales were down slightly, to 6.32 million cars and trucks, and revenue dropped 2 percent to $144.1 billion.
Ford had repeatedly warned that earnings would be lower as it invested for the future. The company spent heavily to introduce 24 vehicles worldwide, including a redesigned Mustang and the new aluminum-bodied F-150 pickup truck. Ford plowed money into five new plants in Asia and racked up expenses for closing plants in Europe and Australia. It also launched the Lincoln luxury brand in China.
All that effort puts 2015 on track to be "a breakthrough year," Ford President and CEO Mark Fields said Thursday. Boatloads of Mustangs are steaming toward China and the redesigned Edge and Explorer are hitting the U.S. market just as SUV sales are soaring. Ford says the new F-150 is already the fastest-selling vehicle on its lots. And with only 15 new vehicles this year, the company will spend less on costly launches.
Ford forecasts a pretax profit of $8.5 billion to $9.5 billion this year, up from a profit of $6.3 billion in 2014.
There are still some trouble spots. Ford is counting on economic improvement in Brazil, Europe and India to help offset weakness in places like Russia. Ford lost around $300 million in Russia last year because of sharp declines in sales and the ruble devaluation.
Ford also took an $800 million charge in the fourth quarter because of currency controls in Venezuela and the constraints on what it can build and sell in the country. Ford will no longer include Venezuelan operations in its financial reporting; it expects the markets in Venezuela and Argentina will continue to contract this year.
Ford's North American profits will be dinged in the first quarter by the cost of changing over its Kansas City truck plant to aluminum production for the new F-150. Production of Ford's F-Series trucks won't be at normal levels until the second quarter of this year.
The strong dollar puts more pressure on Ford, since rivals like Toyota can load up their models with features at prices U.S. automakers can't match.
Even falling oil prices could be a mixed blessing. While lower oil costs are reducing the price of commodities like steel and putting more money in buyers' pockets, they could also hurt demand for trucks in the oil and gas industry, which has been a steady source of buyers for Ford.
But Fields seems unrattled.
"We'll deal with the hand that we're given," he said.
Investors reflected that confidence. Ford's share rose 36 cents to $14.82 in afternoon trading.
S&P Capital IQ analyst Efraim Levy, who has a "buy" opinion on Ford's shares, said the company should start getting some payoff from last year's investments.
"Since the beginning of 2014 it's been a 2015 story," he said. "Now you have to deliver. There are no excuses. And I think they could do it."
Ford's net income fell to $52 million in the fourth quarter. But without one-time items, including the Venezuela charge, Ford earned $1.1 billion, down 15 percent from a year ago.
Its adjusted earnings of 26 cents per share beat Wall Street's forecast of 22 cents per share, according to FactSet. Fourth-quarter revenue fell 4.5 percent to $35.9 billion, but also beat analysts' expectations.
Ford's full-year adjusted earnings of $1.16 per share also beat forecasts.
In North America, Ford's full-year profit fell 22 percent to $6.9 billion, largely the result of a slowdown in pickup truck sales as the company prepared to launch the new F-150.
Ford said profit-sharing checks for its 50,000 U.S. hourly workers, which are based on North American profits, will total around $6,900 when paid in March. That's down from a record $8,800 per worker last year.
The losses were offset by Ford Credit, the company's finance arm, which earned a pretax profit of $1.9 billion. That was the unit's best result since 2011. Ford also earned a record full-year profit of $589 million in Asia.
In Europe, Ford narrowed its full-year loss to $1.1 billion. Ford's European sales improved thanks to new vehicles, but results were hurt by the economic slowdown in Russia. In South America, Ford's losses ballooned to $1.2 billion.
(Copyright 2015 by The Associated Press. All Rights Reserved.)