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Ford chairman says 'fairly large' changes in store for automaker
[DETROIT] Ford Motor Co shareholders should expect "fairly large" changes in the coming year, executive chairman Bill Ford Jr told Reuters, building on the automaker's moves to discontinue some North American models and boost electric vehicle investment.
Ford has promised to cut costs overall but still faces questions about lagging performance in certain regions and calls for more details on its restructuring.
Its shares have barely budged since chief executive Jim Hackett took the helm last year.
"It could be regions, it could be functions, it could be areas of emphasis," Bill Ford said in an interview on Tuesday."We've done some big things, and we still have some big things to do."
The automaker lost US$4 billion in South America from 2013 through the first quarter of this year, and its chief of global operations said in January it was "exploring every option you can imagine."
Analysts have also urged an overhaul of European passenger car operations to help Ford reach its 8 per cent pre-tax profit margin goal.
Bill Ford said the automaker will be able to use cost savings to return cash to shareholders, invest in new technology and businesses and fund restructuring.
"We believe we can take care of all three," he said.
Mr Hackett since January has outlined plans to cut costs by a cumulative US$25.5 billion by 2022 and prune Ford's list of North American sedans and compact cars, while boosting investments in electric vehicles and its product lineup in China.
The company plans to invest US$11 billion in new electric vehicles by 2022 but cut overall capital spending by US$5 billion over 2019 to 2022, a nearly 15 per cent reduction from the prior plan.
Savings from discontinuing unprofitable passenger car models in North America will help pay for a fresher lineup of models, new electric vehicles and technology-driven ventures, Bill Ford said.
"We are adding lots and lots of new models, to the point where we are going to have in 18 months to two years one of the freshest show-rooms in the industry," he said.
Ford, like rivals, is investing in building more electric vehicles and automated driving systems. It is also investing in a network that can be used as the platform for transportation services.
The company last month indicated it is spending about US$160 million a quarter on mobility services efforts and autonomous vehicles.
Responding to criticism from environmental groups over a shift in the company's lineup to sport utility vehicles, Bill Ford said the new models will be more efficient than those they replace.
"Already some of the SUVs are more efficient than their counterparts on the car side," he said, noting that helps the company reduce greenhouse gas emissions and deal with volatility in oil markets.
For the near term, Ford is highly dependent on profits from sales of large pickup trucks and SUVs in the United States.
Ford shares closed down 1.8 per cent on Wednesday after the company said production of Super Duty and F-150 pickups at three US plants would be temporarily halted because a key supplier's plant was shut down by a fire.
Ford late Wednesday said the lost production would "have an adverse impact" on the company's results, but left unchanged its guidance for full-year adjusted earnings per share of US$1.45 to US$1.70 a share.
Some analysts earlier this year expressed frustration with Mr Hackett for not sharing more details of his restructuring plans.
Mr Hackett, a former Steelcase Inc CEO, had a learning curve in a new industry in which decisions involve numerous factors including regulation, currency risks, trade concerns and complex supply chains, Bill Ford said.
"I'm really pleased how quickly that learning curve has flattened out," he said. "Jim can juggle a lot of balls at once without them hitting the ground."
Shareholders will have an opportunity to ask questions via teleconference when Ford leads an annual meeting on Thursday, a year after he introduced Mr Hackett to lead the company, replacing Mark Fields.
Ford shares have not recovered from a hit in January after Mr Hackett and other executives forecast 2018 results that disappointed analysts and investors. The stock is down 10 per cent year to date.
Despite overall profitability, Ford's market capitalisation of US$44 billion trails unprofitable Silicon Valley electric car maker Tesla Inc, which has a market capitalisation of US$51.3 billion, a reflection of investor doubts that Ford can re-ignite growth.