Ford targets higher capital expenditure, dividend boost by mid-decade

Wed Aug 14, 2013 4:55pm EDT
 
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By Bernie Woodall

DETROIT (Reuters) - Ford Motor Co (F.N: Quote) on Wednesday laid out a more ambitious mid-decade plan that includes a higher dividend and a 25 percent increase in capital spending, to take advantage of growing automotive demand worldwide.

Ford's plans will "enable us to sustain an investment grade credit rating through the inevitable downturn to come," Bob Shanks, the automaker's chief financial officer, said in a Ford presentation at an analysts conference sponsored by J.P. Morgan.

The No. 2 U.S. automaker expects capital expenditures of around $7.5 billion by mid-decade, up from its previous forecast of $6 billion.

"We've indicated that we are going to be taking our capital spending to higher levels because we believe that we've got a lot of momentum and some really, really great growth opportunities that we want to invest in," Shanks said.

"I wouldn't think that there would be a whole lot beyond what we have already outlined, through mid-decade," he said.

Ford plans to return more capital to shareholders in the form of a dividend that would increase with Ford's earnings and could be sustained even during an economic downturn.

The company returned to paying a dividend last year, and doubled the per share amount to 40 cents in the first quarter.

Shanks said that Ford is girding itself for cyclical economic downturns by having an ongoing average of $20 billion in automotive gross cash, and with revolving credit facilities, total automotive liquidity of about $30 billion.   Continued...

 
The Ford logo is pictured on the rooftop of Austria's Ford head branch in Vienna March 19, 2013. REUTERS/Heinz-Peter Bader