FORD EXPECTS OUTSTANDING 2013 AND PROVIDES 2014 OUTLOOK+
Ford expects 2013 to be one of the best full-year results in its
history, with strong revenue growth, market share in all regions
improved or equal to last year, total company pre-tax profit of about
$8.5 billion, substantially higher Automotive operating-related cash
flow than a year ago and a stronger balance sheet
2014 is expected to be another solid year and a critical next step in
the One Ford plan as Ford launches the most vehicles in a single year
in more than a century and invests across the business for profitable
growth in the years ahead
DEARBORN, Mich., Dec. 18, 2013 - Ford Motor Company announced today
that 2013 is expected to be one of the best years in its history and
projects 2014 to be another solid year for the company with 23 global
product launches and continued investments around the world as the
next step in its One Ford plan for profitable growth.
"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
2013 An Outstanding Year
2013 is expected to be among the best years in Ford's history.
Full-year Automotive revenue is projected to grow about 10 percent,
with market share increases in all regions other than Europe, where
Ford expects higher retail share of the retail passenger car industry,
as well as improved share of the commercial vehicle market. In Asia
Pacific Africa and China, the company expects record market shares.
Ford is making good progress in implementing its Europe transformation
plan and also announced earlier in the year a plan to restructure
operations in Australia.
The company continued to strengthen its Automotive balance sheet. It
estimates that it nearly cut in half the underfunded status of its
global pension plans compared with the end of 2012. 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. Based on
performance and an improving balance sheet, the company now is rated
investment grade by four of the major rating agencies.
Ford now projects that total company full-year pre-tax profit,
excluding special items, to be about $8.5 billion, better than 2012
and in line with its most recent outlook. The company also is
reconfirming its outlook that Automotive operating margin will be
higher than a year ago and that Automotive operating-related cash flow
will be substantially higher than 2012, potentially a record.
Ford expects North America full-year 2013 pre-tax profit to be the
highest in more than a decade, with an operating margin of 9.5 percent
to 10 percent; this compares to prior guidance of about 10 percent.
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.
In South America, the company now expects results to be about
breakeven as recent government actions in Venezuela have affected
adversely the business and overall results in the region. This
compares to prior guidance of about breakeven to profitable results
The 2013 outlook for all other Automotive business units, Automotive
net interest expense and Ford Credit is unchanged from prior
Finally, the company expects its full year operating effective tax
rate to be about 27 percent. This compares to prior guidance of less
than 30 percent.
In addition to an expectation of a much improved funded status for
Ford's global pension plans at year-end 2013, substantial progress has
been made in two other areas.
First is the company's U.S. salaried retiree voluntary lump sum
program that began in 2012 and is now complete. For the total program,
the company made payments to about 35,000 people, or about 37 percent
of those eligible, settling $4.2 billion in obligations or about 25
percent of the related liability. In total, Ford will recognize
special item charges of about $850 million, of which $600 million will
be in 2013 with about $150 million projected to occur in the fourth
The second area of progress is reduced cash requirements during the
next three years to fully fund Ford's global funded pension plans. The
company now expects average annual contributions required over the
next three years to be about $1 billion to $2 billion per year, down
from the prior outlook of $2 billion to $3 billion per year.
2014 The Next Step in Ford's Plan to Deliver Profitable Growth
2014 is expected to be another solid year for Ford and a critical
building block in the One Ford Plan as Ford 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. This is supported by a strengthening balance sheet
that will continue to enable the company to reward shareholders with
In 2014, Ford will embark on its most aggressive product launch
schedule in its history. The company will launch 23 all-new or
significantly refreshed vehicles around the world - more than double
the 11 global vehicle launches in 2013.
"This is our most ambitious launch plan ever, as we continue to
implement our One Ford plan," said Shanks. "In 2014, we are
investing across the world to support next year's launches, but also
to drive profitable growth beyond 2014 as we serve more customers in
more markets and in more segments."
Overall, 2014 represents the next step in delivering profitable growth
for all, with total company pre-tax profit, excluding special items,
projected at $7 billion to $8 billion.
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 Shanks.
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.
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
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.
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
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 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.
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.
2013 Planning Assumptions and Outlook
The following is a summary of present planning assumptions and key
metrics for 2013 compared with the plan the company shared at the
beginning of the year.