Ford earnings fall, but Wall Street is still pleased
| Dearborn, Mich.
Ford's聽net income tumbled in the fourth quarter as the company took an expected charge to deal with its struggling Venezuelan operations.
But without the charge and other one-time items,聽Ford聽came out ahead of Wall Street's expectations for the fourth quarter and the full year.
Its shares rose 2 percent in premarket trading about an hour before the market open.
Ford's聽net income fell to $52 聽million in the fourth quarter, largely due to an $800 million charge because of Venezuelan currency controls and constraints on what in can build and sell in the country.聽Ford聽announced last week that it would remove its Venezuelan operations from its financial reporting in future quarters.
Ford's聽earnings of a penny per share compared to earnings of 75 cents per share in the fourth quarter a year ago.
Without one-time items, including the Venezuela charge and separation payments due to plant closures in Europe and Australia,聽Ford聽earned $1.1 billion in the quarter, down 15 percent from a year ago.
But 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.
For the full year,聽Ford's聽earnings fell 56 percent to $3.2 billion, or 80 cents per share. On a pretax basis, the company earned $6.3 billion, down from a near-record of $8.6 billion a year ago.
Worldwide sales fell less than 1 percent to 6.3 million cars and trucks. Sales were down in North America, South America and the Middle East but rose in Europe and Asia.
Dearborn, Michigan-based聽Ford聽had repeatedly warned that its profits would be down in 2014. Last fall, the company cut its full-year pretax earnings forecast to $6 billion from $7 billion to $8 billion.
Ford聽spent heavily to introduce a record 24 vehicles worldwide, including a redesigned Mustang and the new aluminum-bodied F-150 pickup truck.聽Ford聽is spending more than $1 billion to retrofit its two U.S. plants to make the new truck; while shipments have already begun, the Dearborn and Kansas City plants that make the lucrative trucks won't be fully operational until the second quarter of this year.
Ford聽struggled with higher warranty costs, including a $500 million charge for the recall of 850,000 vehicles with defective air bags. The company is also rapidly expanding in Asia, where it's building five plants and launching the Lincoln brand.
The losses were offset by聽Ford聽Credit, the company's finance arm, which earned a pretax profit of $1.9 billion. That was the unit's best result since 2011.聽Ford聽also earned a record full-year profit of $589 million in Asia.
In North America,聽Ford's聽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.聽Ford聽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.
In Europe,聽Ford聽narrowed its full-year loss to $1.1 billion.聽Ford's聽European sales improved thanks to new vehicles, but results were hurt by the economic slowdown in Russia. In South America,聽Ford's聽losses ballooned to $1.2 billion as the company was hit by import restrictions in Argentina and a weaker economy in Brazil.
Profit-sharing payments to each of聽Ford's聽50,000 U.S. hourly workers will be about $6,900 when paid in March. That's $1,900 less than last year, which was a record.
Things are expected to improve this year.聽Ford聽expects a pretax profit of $8.5 billion to $9.5 billion in 2015. The company is launching just 15 vehicles and it expects warranty costs to fall.
Ford聽shares rose 25 cents to $14.71 in premarket trading about an hour ahead of the market open.
