By Christina Rogers 

Ford Motor Co. swung to a net loss of $800 million in the fourth quarter of 2016, as special charges related to the company's pension plans and the cancellation of a plant in Mexico overshadowed strong operating results in North America and improving profitability in Europe.

Revenue for the just-ended quarter fell 4% to $38.7 billion on lower global wholesales, including a U.S. sales decline of 2% during the period. Fourth-quarter operating profits were down 20% to $2.1 billion as the company also faced headwinds in China, where new-car pricing continues to weaken.

Adjusted earnings were 30 cents per share in the fourth quarter, a 1-cent miss from Wall Street expectations of 31 cents a share.

The No. 2 U.S. auto maker reported full-year operating results of $10.4 billion in 2016, slightly ahead of guidance and the auto maker's second best pretax result in history.

Company executives had hoped to deliver another record year in 2016, but in September Ford cut full-year guidance after announcing it would take a $600 million charge related to an expanded safety recall.

Ford's full-year net income of $4.6 billion, down 60% over the prior-year, was dented by a hefty $3 billion special-item charge booked in the fourth-quarter related to a remeasurement of the assets and obligations in retiree-benefit plans. Ford also took a $200 million charge in the same quarter on the cancellation of its assembly plant in Mexico, which it started construction on in the summer.

Company executives have signaled 2017 will be a year of transition for the Dearborn, Mich., auto maker, marked by a heavy investment in new technologies and initiatives that will help the company diversify beyond its core auto-making business and enter new transportation-related services.

"We're still expecting strong results in 2017 but we do expect results to be lower for the company," said Ford Chief Financial Officer Bob Shanks.

Mr. Shanks said he is encouraged by President Donald Trump's proposed economic policies but says it is too early to tell how his agenda will impact Ford's bottom line. In preparation, the company has begun to model the impact of Mr. Trump's proposed corporate tax plan on future earnings internally, he added.

"We have seen a very positive response from the market," Mr. Shanks said.

Ford is coming off one of its most profitable periods in history with North America -- by far its biggest moneymaking region -- benefiting from two consecutive years of record U.S. car and truck demand.

Operating profits for Ford's North American operations were $1.96 billion in the fourth-quarter, about flat with the same period a year ago, and about $9 billion for the full-year 2016. As part of the company's profit-sharing formula, which is based on North American results, Ford's 56,000 union-represented workers will each receive a $9,000 bonus check in March.

While Ford continues to benefit from strong pricing on its big pickups and SUVs -- average transaction prices rose $1,400 per vehicle in the fourth quarter -- slumping passenger-car demand in the U.S. and rising incentives remain a drag on North American operating results, which account for nearly 90% of company profits.

Operating margins also slipped in 2016 to 9.7% in the company's core North American operation due to the recall charge in the third-quarter and lower dealers stocks at the end of the year.

In Europe, Ford posted an operating profit of $166 million compared with $133 million in the same year-ago period. The company's recovery in the region continues to gain steam, sidestepping currency declines and softer sales in the U.K. tied to the Brexit impact.

In Asia Pacific, Ford recorded a $284 operating profit, down from $444 million a year ago, as the auto maker continued to struggle with cooling new-car demand in China, the world's largest auto market. Fourth-quarter margins in Asia Pacific fell to 8.4% from 13.1% a year ago.

Ford's operating losses in South America are starting to level off. It reported $293 million in red ink for the just-ended quarter, compared with $295 million in the same year-ago period. Mr. Shanks says the region's market is showing signs of bottoming out and the company expects a turnaround this year.

Write to Christina Rogers at christina.rogers@wsj.com

 

(END) Dow Jones Newswires

January 26, 2017 08:46 ET (13:46 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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