Analysis: Ford's rosy 2020 outlook hinges on new F-150, Lincoln
By Paul Lienert, Bernie Woodall and Ben Klayman
DETROIT (Reuters) - If Ford Motor Co's (F.N: Quote) new chief executive Mark Fields hoped to muffle the shock of an earnings outlook rollback on Monday by unveiling aggressive growth targets for 2020, then it did just the opposite, as investors and analysts were doubtful about the ambitious plan.
Fields, who succeeded popular CEO Alan Mulally on July 1, unnerved investors by cutting the company’s profit outlook for this year and next, citing the cost of recalls as well as weakness in Russia and South America.
But he and his executive team also laid out an ambitious six-year plan that hinges on several key elements, notably the success of the redesigned 2015 F-150 pickup in North America and a $2.5-billion effort to rebuild the stagnant Lincoln brand in the United States and China.
"Mark probably wanted to put his stamp on things early," said Matt DeLorenzo, managing editor of Kelley Blue Book, a leading auto website. "He needs to appear to be a bold and decisive leader, but he has a lot on his plate."
Ford's challenges and setbacks come as U.S. sales are on an upswing. While domestic rivals General Motors Co (GM.N: Quote) and Chrysler Group FIA.MI have seen year-to-date sales rise 3 percent and 14 percent, respectively, Ford has dropped by a fraction, due in large part to the lengthy and costly changeover to the new F-150.
General Motors will provide an update on profit expectations for 2014 and a long-range financial outlook on Wednesday at its investor day. GM closed down 0.87% to $31.94 on Tuesday. Ford closed down 2.12 percent at $14.79. Both companies are near their 52-week lows.
The launch of Ford's aluminum-intensive F-150, which goes on sale this fall, is the most critical order of business: The big F-series truck, America's best-selling vehicle, historically has contributed the lion's share of Ford's global pretax profits.
The new model will cost more to build, Ford executives have acknowledged. And analysts said the automaker may not be able to recover all of those costs, including those associated with more expensive features and production lost through lengthy changeovers at two U.S. plants, through higher pricing for several years. Continued...