After A Successful 2013, Ford Expects Sustained Triumphs In 2014

After a very successful and productive 2013 that brought stellar sales and financial results, 2014 is expected to be another great year for the Ford Motor Company. In its outlook for the new year, the automaker referred to 2014 as “a critical building block in the One Ford Plan” as it “moves forward in building stronger global brands, a growing business based on outstanding products and a better balanced business in terms of source of sales and profitability.” Ford noted that its plans are supported by a strengthening balance sheet that will continue to enable it to “reward shareholders with attractive returns”.

The Product

2014 will mark the most aggressive product launch schedule in Ford’s history. The automaker will launch 23 all-new or significantly-refreshed vehicles around the world — more than double the 11 global vehicle launches in 2013.

The Profit

Seen as the next step in delivering profitable growth, Ford expects total company pre-tax profit, excluding special items, to land in the vicinity of $7 billion to $8 billion.

Ford’s plans and expectations on a per region basis are as follows:

North America

Ford will have 16 launches in North America in 2014. This is triple the number of vehicles launched in Ford’s largest region in 2013. The 2014 launches in North America will cover a significant percentage of the region’s volume. As a result, Ford expects wholesale volume next year in North America to be lower than in 2013 and net pricing to be slightly unfavorable as it runs out prior models and assumes a continuation of a more competitive pricing environment for small and medium cars and utilities due to the weaker yen. Costs associated with this product growth will increase next year as well.

“The payoff for North America from the 2014 launches and investments we incur for future periods will be a stronger product lineup and volume and revenue opportunities into 2015 and beyond,” said Bob Shanks, Ford executive vice president and chief financial officer.

As a result, Ford expects North America 2014 pre-tax profit to be lower than in 2013, with an operating margin ranging from 8 percent to 9 percent, consistent with the company’s targeted ongoing range of 8 percent to 10 percent.

South America

The One Ford plan is expected to improve profitability in Brazil and Argentina in 2014, particularly as customers continue to respond well to the company’s new products, but the company expects these improvements to be offset by deterioration in the external environment in Venezuela. This includes a planning assumption of a major devaluation in the bolivar — from 6.3 to 12 bolivars to the U.S. dollar — with an unfavorable profit effect of about $350 million.

As a consequence, results in 2014 for South America are expected to be about the same as in 2013 or about breakeven. There are risks to this outlook, however, given the volatility of the situation in Venezuela and increasing risks in the environment in Argentina.


Ford’s Europe transformation plan is on track. Ford’s Genk, Belgium, facility will close at year-end 2014 as planned, significantly contributing to an 18 percent reduction in Ford’s capacity in Europe, excluding Russia, and generating savings in 2015 and beyond. During the year, however, the company expects to incur restructuring costs of about $400 million related primarily to accelerated depreciation of plant assets and production relocations. These costs will be reported in Europe’s operating results as they have been in 2013. In addition, the company will incur higher launch and engineering costs in 2014 consistent with its plan to add at least 25 new vehicles in five years.

The company also expects special item charges in Europe in 2014 of $400 million to $500 million, mainly related to personnel separations; these charges will not be reported in operating results.

For 2014, the company expects results in Europe to improve compared to 2013 as it continues the successful implementation of its transformation plan to achieve profitability in the region in 2015.

Asia Pacific

Ford’s operations in Asia Pacific have been undergoing a positive transformation during the last several years as it invested consistently for growth. The results of this investment have been strong growth, including record market share in 2013 and a profitable business, including what is expected to be a record full-year result this year.

The company will continue to execute its growth strategy for the region in 2014. It currently has six major facilities under construction across the region, with two facilities in China starting production next year and two more in 2015. In India, the two facilities now being built also will start production in 2015.

For 2014, the company expects pre-tax profit in Asia Pacific to be about the same as 2013 due to costs associated with its growth, a slower rate of top-line growth due to production constraints and a more competitive pricing environment, and unfavorable results in Australia as Ford restructures the business and reflects the effects of a weakening Australian dollar.

Ford Credit

Ford Credit is expected to perform well next year with profit about equal to this year. Growth should offset the continued normalization of credit losses, the continued run off of higher-yielding assets and the impact of Ford Credit’s strategy to unencumber its balance sheet to build a stronger investment-grade company.

Mid-Decade Outlook

Beyond 2014, Ford generally remains on track to achieve its mid-decade outlook, but its targeted global Automotive operating margin of 8 percent to 9 percent is at risk. This is due to the severe European downturn and conditions in South America, especially in Venezuela, that were not anticipated at the time the guidance was provided in mid-2011. The company expects its results over the mid-decade period to be strong and improving.

News editor focusing on business, financial, and sales coverage who loves anything on wheels, especially if it's fast.

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