- Full-year operating cash flow up, adjusted free cash flow flat
- Automotive EBIT for 2019 declined; benefits of Global Redesign and Fitness initiatives evident in lower Automotive structural costs and other underlying operating improvements
- Product mix and net pricing strong in most regions, led by North America, with a sharper focus on franchise strengths, especially trucks, SUVs and commercial vehicles
- Extensive new-product introductions, featuring electric commercial and passenger vehicles, and investments in smart-vehicle capabilities continuing through and beyond 2020
- For full-year 2020, Ford expects adjusted free cash flow of $2.4 billion to $3.4 billion, and adjusted EBIT of $5.6 billion to $6.6 billion
DEARBORN, Mich., Feb. 4, 2020 – Ford Motor Company today announced its fourth-quarter and full-year 2019 financial results, closing a year of strategic milestones in the company’s ongoing, large-scale transformation.
Company Key Metrics Summary
Fourth-quarter adjusted free cash flow was $498 million, down 67 percent. The company reported a Q4 net loss of $1.7 billion, or negative 42 cents per share, which includes a previously disclosed $2.2 billion pension and OPEB remeasurement loss . Adjusted earnings before interest and taxes (EBIT) were $485 million, down 67 percent, with improved results in China and Europe more than offset by a decline in North America. Revenue was $39.7 billion, down 5 percent.
Ford’s Automotive EBIT for the quarter was $215 million, 81 percent lower. Gains in net pricing and product mix, particularly in North America, were more than offset by lower launch-related volumes; higher costs for new products; unfavorable currency exchange; and UAW contract- related costs.
For full-year 2019, Ford’s adjusted free cash flow was $2.8 billion, flat compared to 2018. Revenue was $155.9 billion, down 3 percent. Adjusted EBIT was $6.4 billion and adjusted EPS was $1.19.
Ford Credit had an exceptional year, posting its best results in nine years, with $3 billion in earnings before taxes.
“We made great strategic progress this past year with a fundamental redesign of Ford that is setting us up to compete and win in this emerging era of Smart Vehicles for a Smart World – with great products, services and long-term value,” said Jim Hackett, Ford president and chief executive officer.
”Financially, the company’s 2019 performance was short of our original expectations, mostly because our operational execution – which we usually do very well – wasn’t nearly good enough. We recognize, take accountability for and have made changes because of this.”
Among 2019 strategic highlights were the November reveal of the Mustang Ma ch-E, an exciting, zero-emissions battery-electric vehicle that will be digitally connected, enabling constant improvement through real-time over-the-air updates. Additionally, Ford entered strategic agreements and partnerships around the world – with VW, Rivian and Mahindra — to complement and accelerate its own capabilities in autonomous and electric vehicles and in emerging and emerged markets.
Operationally, Global Redesign actions during 2019 included decisive moves to both reinforce strengths and address under-performing parts of the businesses. As examples:
- Europe generated $21 million in EBIT in Q4 – versus a loss of $199 million a year ago – and improved to nearly break-even for the full year. The business refocused its resources on three product segments: commercial vehicles, selected passenger vehicles and iconic nameplates, such as Mustang. At the same time, the business became more efficient, announcing plans to close or sell six manufacturing plants and eliminate 12,000 positions across the region.
- Ford’s fourth-quarter operating loss in China was 61 percent smaller than in the same year-ago period, thanks to lower structural costs. This was the fourth straight quarter of year-over-year improvement in China.
- In South America, Ford exited production of heavy trucks and discontinued unprofitable sedan models, closing a plant in São Bernardo. The company’s regional workforce today is more than 40 percent smaller than three years ago.
- At the same time, Ford carried out key parts of perhaps the most ambitious vehicle renewal in its history. By the end of 2019, 40 percent of Ford’s global product portfolio was new since the end of 2017, a rate expected to reach 90 percent by 2022.
Among products introduced in 2019 were new versions of the Ford Explorer, Escape and Super Duty, and Lincoln Aviator and Corsair, in North America; Ford Puma and two-tonne Transit in Europe; and first-ever battery-electric vehicle in China, a version of the Ford Territory. Production of all of these vehicles will fully ramp up during 2020.
In addition to Mustang Mach-E, refreshed or all-new vehicle launches planned for 2020 – in North America, representing 40 percent of Ford’s current volumes – include:
- F-150, featuring a first-ever hybrid-electric version
- A small off-road utility vehicle
- The first of 30 market-specific Ford and Lincoln vehicles in China – 10 of which will be electric – over the next three years, and
- Electrified versions of the Lincoln Corsair and Ford Escape/Kuga.
“Enhancing customer experience and improving operating rigor are persistent priorities for us,” said Tim Stone, Ford’s chief financial officer. “We have abundant opportunities in both areas.”
Regional Highlights Q4
Outlook
According to Ford, it is too early to estimate implications of the coronavirus outbreak on its business. Excluding any possible effects from the issue, for full-year 2020, the company anticipates:
- Adjusted free cash flow of $2.4 billion to $3.4 billion
- Adjusted EBIT of $5.6 billion to $6.6 billion, which assumes at least nominal growth in the Automotive business, offset by lower EBT from Ford Credit and modestly higher investment in Mobility
- An adjusted effective tax rate in the mid-to-high teens, producing an adjusted EPS of 94 cents to $1.20 per share
- Capital expenditures of $6.8 billion to $7.3 billion – as much as $800 million below the level of 2019, reflecting benefits from the company’s fitness initiatives
- Funded pension contributions of $600 million to $800 million, and
- Regular quarterly dividends of 15 cents per share, subject to board approval each quarter.
In the first quarter, Ford expects adjusted EBIT to be down more than $1.1 billion from Q1 2019 as a result of the continuation of higher warranty costs seen during the second half of 2019, lower vehicle volumes, lower results from Ford Credit, and higher investment in Mobility. The company expects its Q1 adjusted effective tax rate to be at the high end of its full-year guidance range.
Ford’s guidance assumes no material change in the current economic environment, including commodities, foreign exchange and tariffs. Actual results could differ materially from guidance due to risks, uncertainties and other factors, including those detailed in the company’s Cautionary Note on Forward Looking Statements.
The company will report first-quarter 2020 financial results on April 28. Ford said it will announce the date of each subsequent earnings release in conjunction with results for current quarter.