Ford shares tumble on lower profit outlook for 2014-2015
By Bernie Woodall
DEARBORN (Reuters) - Higher recall costs in North America and steeper losses in Russia and South America have caused Ford Motor Co (F.N: Quote) to slash its forecast for pretax profit this year to $6 billion, from $7 billion to $8 billion previously, executives told investors at a briefing on Monday.
Bob Shanks, Ford's chief financial officer, also said the company's 2015 pretax profit is now expected to rise to between $8.5 billion and $9.5 billion, versus analysts' estimates of $10.6 billion.
Ford shares closed down 7.5 percent at $15.11 on Monday and fell further in after-hours trading to $15.
The No. 2 U.S. automaker revealed the bad news during the first investor day it has held under the leadership of Chief Executive Mark Fields, who took reins of the company from Alan Mulally on July 1. Mulally is credited with reversing a steep decline at Ford and returning it to profitability and an investment grade rating.
Fields said he is not concerned about what he sees as short-term bad news ahead of what he calls "a growth story," including an increase in Ford's global auto sales to 9.4 million vehicles by 2020 from 6.2 million in 2013.
He also said that laying out the bad news to investors at a conference center in Dearborn, Michigan near Ford headquarters was a sign of progress from the days when the company delayed action on difficult issues.
General Motors Co (GM.N: Quote) plans to host a similar investor day on Wednesday in Detroit.
Ford CFO Shanks said the company's money-losing operations are targeted to achieve profit margins by 2020 of 7 percent to 9 percent in South America and 3 percent to 5 percent in Europe. Continued...