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 The Detroit-area company said its mid-decade target for a global
automotive profit margin of 8 percent to 9 percent was also at risk.
Ford expects a global pretax profit next year of between $7 billion
and $8 billion. That's lower than an expected $8.5 billion expected
in 2013, which is set to be one of the most profitable in the
company's 110-year history, Ford said. Much of that amount — about
$8.34 billion — is estimated to come from North America.
Ford investors were caught off-guard by the profit outlook.
"I had thought that Ford was humming along just fine," said Gary
Bradshaw, portfolio manager with Dallas-based Hodges Capital
Management, which owns Ford shares. "Autos have been a bright spot
in the economy. I'm a little bit surprised."
Buckingham Research analyst Joseph Amaturo said he expected
investors to "aggressively rotate out of Ford and into General
Motors Co <GM.N>" due to the latter's advantage with the rollout of
its high-profit, redesigned full-size pickup trucks and related
SUVs.
He maintained an "underperform" rating on Ford shares.
A major expense next year for Ford will be a record 23 global
product launches, which, Shanks said, showed a commitment to future
expansion and preparation for "profitable growth."
Product launches will have more of an impact in the second half of
2014 than in the first half, Shanks said.
Ford's 2014 profit was set to drop "due to deterioration in North
America pricing and lower F-Series production," Amaturo said.
The Ford F-Series pickup truck — the most profitable vehicle in the
automaker's lineup — is sold in North America, where it has been the
industry's top-seller for more than three decades.
A new version of the F-Series is to debut next fall, and there is
concern among some analysts that inventory will be constrained
during its launch.
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VENEZUELA
Shanks said that in South America, Ford is expected to show
breakeven results in 2014 as in 2013. Improvements in Brazil and
other areas will be outweighed by difficulties in Venezuela.
He said Ford expects the U.S. dollar to drop to 12 bolivars from the
current 6.3 bolivars, "with an unfavorable profit effect of about
$350 million."
The ruling Socialist Party in Venezuela controls the currency
exchange rate. Shanks said Ford expects a devaluation of the
Venezuelan bolivar — as occurred in early 2013 — to take place in
early 2014.
There is also concern that Venezuela may expand its price-setting
policies to include new vehicles, as it has done for auto parts sold
to dealers. The prices the government set for auto parts were below
normal profit margins, Shanks said.
In Europe, Ford expects the overall market to begin improving. Once
it gets beyond its restructuring expenses of $400 million in both
2013 and 2014, the company expects to be profitable in the
continent, which has been a damper on its earnings over the past
several years.
"We fully expect to be profitable in Europe in 2015," said Ford
Chief Financial Officer Bob Shanks, who gave the end-of-year
presentation in New York.
Ford shares were down $1.16, or 7 percent, at $15.54, in afternoon
trading on the New York Stock Exchange.
(Additional reporting by Bernie Woodall
in Detroit; editing by Bernadette Baum)
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