Ford Profit Dented by Swings in Commodities Prices
January 24 2018 - 4:56PM
Dow Jones News
By Mike Colias
Ford Motor Co. on Wednesday reported fourth-quarter operating
profit that fell short of earlier forecasts, results that signal
continued financial pressure as first-year Chief Executive Jim
Hackett tries to transform the company.
Ford reported after the market close net income of $2.4 billion
for the October-to-December period, compared with a loss of $800
million a year earlier, which included a hefty special charge
related to the company's pension plans.
The nation's No. 2 auto maker by sales said operating income
fell 19% to $1.7 billion, hurt by the higher cost of steel,
aluminum and other commodities, as well as unfavorable
foreign-exchange rates. Earnings per share were 39 cents, lower
than the 42-cent average forecast of Wall Street analysts. The
results were identical to preliminary numbers Ford provided to
analysts last week.
For the full year, Ford's operating income fell 18% to about
$8.4 billion. The company expects the bottom line to shrink this
year on an earnings-per-share basis, warning last week that a
continued rise in raw-materials costs and troublesome exchange
rates would hurt results by $1.6 billion compared with 2017. Ford
expects operating income to fall to $1.45 to $1.70 a share.
Fourth-quarter revenue rose 7% to $41.3 billion, surpassing Wall
Street expectations of about $37 billion.
The downbeat 2018 outlook relative to rivals spotlights the
tough road ahead for Mr. Hackett, 62, promoted in May to set a
clearer vision for Ford's future while also putting Ford on a
"fitness" regimen to improve its cost structure and returns on
capital.
Ford Chief Financial Officer Bob Shanks said Ford needs to do a
better job managing the business to weather swings in raw-material
costs and exchange rates.
"We should still be performing at a higher level," Mr. Shanks
told reporters Wednesday. The hit from commodities and foreign
exchange "underscores to us the lack of fitness of the company
relative to where it should be."
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
January 24, 2018 16:41 ET (21:41 GMT)
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