Ford sets a special $1 billion dividend, but profit outlook disappoints
By David Shepardson
(Reuters) - Ford Motor Co (F.N: Quote) on Tuesday declared a $1 billion supplemental cash dividend, but its outlook for 2016 profit failed to exceed Wall Street's estimates, sending its stock down in after-hours trading.
The No. 2 U.S. automaker said it expected record 2015 pre-tax profit, excluding special items, in the "upper half" of its outlook for $10 billion to $11 billion. That is above the average analyst forecast of $9.4 billion, according to Thomson Reuters I/B/E/S.
Profit for 2016 will be at least as high, excluding special items, said Ford. Analysts were expecting pre-tax profit of $11 billion for 2016, on average.
“Their guidance is in line or below what was expected," said Matthew Stover at Susquehanna Financial.
Ford shares dipped about 1 percent from Tuesday's close, to $12.55, in after-market trading.
Ford's chief financial officer, Bob Shanks, told investors at a conference in Detroit Tuesday evening the company expects higher costs this year as it invests in new model launches and technology-driven ventures to offer transportation as a service or develop autonomous vehicles. Shanks also cautioned that Ford's North American margins, forecast at 9.5 percent or better for 2016, may not have much room to improve in a competitive market.
"At some point margins don’t grow any further," Shanks said. The forecast margins for North America "are extremely strong margins for a volume manufacturer." Healthier profits from Europe and Asia offer an opportunity for overall profit growth, he added.
The $1 billion supplemental cash dividend, or 25 cents per share, is in addition to the first-quarter regular dividend of 15 cents per share, which is unchanged from the dividend paid in the fourth quarter of 2015. Continued...