Earlier this week, Ford Motor Company announced that it expects 2013 to be one of the best years in its history thanks to healthy results in important business metrics, including revenue, market share, the company’s balance sheet, and profit.
For starters, full-year revenue from its automotive business operations is projected to grow about 10 percent in 2013 over 2012. The jump is fueled by increases in market share in all regions except for Europe, where Ford expects higher retail share of the retail passenger car industry, as well as improved share of the commercial vehicle market. Notably, Th Blue Oval expects record market shares in its Asia Pacific Africa and China regions. To that end, Ford stated that it “is making good progress in implementing its Europe transformation plan” while also announcing a plan to restructure operations in Australia earlier this year.
Ford also continued to strengthen its balance sheet related to automotive operations. It estimates that it cut nearly in half the underfunded status of its global pension plans compared with the end of 2012. The automaker is also making a push to appease investors, stating the following in a news release:
“Ford also shared a comprehensive capital strategy with investors, one that is targeted to deliver high levels of shareholder value. Early in the year, Ford doubled its dividend and also implemented an anti-dilutive share repurchase program to offset compensation-related issuances.” Additionally, Ford is now rated investment grade by four of the major rating agencies based on better performance and an improving balance sheet.
From a profitability perspective, Ford projects total full-year pre-tax profit, excluding special items to be approximately $8.5 billion, in line with its most recent outlook at better than 2012. Ford also reconfirmed its outlook that operating margin form automotive operations will be higher than in 2012, and that operating-related cash flow from the automotive operations will be “substantially higher than 2012”. The automotive operating cash flow might even set a record for the firm.
In North America, Full-year 2013 pre-tax profit expected to be the highest in more than a decade, with operating margin of 9.5 percent to 10 percent. “This compares to prior guidance of about 10 percent”, and the difference reflects “mainly higher warranty expense of $250 million to $300 million associated primarily with the Escape 1.6 liter recall announced last month.”
Ford expects to break even in South America, as “recent government actions in Venezuela have affected adversely the business and overall results in the region.”
The Blue Oval also stated that the its 2013 outlook for all other automotive business units, automotive net interest expense, as well as Ford Credit is unchanged from prior guidance.
Additionally, Ford expects its full year operating effective tax rate to be about 27 percent compared to to prior guidance of less than 30 percent.
“We are celebrating what we expect to be an outstanding 2013, one that is likely to be among the best in our history,” said Bob Shanks, Ford executive vice president and chief financial officer. “Once the year is finished, we expect it will show that we grew the business, delivered strong financial results, progressed the restructuring of our operations in Europe and Australia, strengthened our balance sheet and provided attractive returns to our investors.”