Ford Motor Co. shares nosedived on Tuesday after it handed investors a weaker-than-expected 2020 forecast, warning that quality problems, lower profits at its credit arm and continued investments in unprofitable self-driving cars would weigh down profits.
Shares in the No. 2 U.S. automaker fell 9.7 per cent in after-hours trading.
“The results were not okay in 2019,” Ford chief financial officer Tim Stone told reporters at the company’s headquarters outside Detroit. “As I look to 2020 and beyond, I’m very optimistic.”
Ford said it expects 2020 operating earnings to be in the range of 94 US cents to US$1.20 a share. Analysts were expecting US$1.26 a share.
The disappointing 2020 forecast, coming after Ford previously trimmed its 2019 outlook, is a blow for chief executive Jim Hackett.
Mr. Hackett, who took over in May, 2017, has been asking investors to be patient with a restructuring that has seen the formation of a wide-ranging alliance on electric vehicles with Volkswagen AG and the sale of its money-losing operations in India to a venture controlled by India’s Mahindra & Mahindra Ltd.
By Ford’s own accounting, the restructuring is far from complete. It has booked US$3.7-billion of the projected US$11-billion in charges it previously said it would take, and expects to book another US$900-million to US$1.4-billion this year.
For the fourth quarter of 2019, Ford reported a net loss of US$1.7-billion, or 42 US cents a share, compared with a loss of US$100-million, or 3 US cents a share, a year earlier.
The quarter included a loss of US$2.2-billion owing to higher contributions to its employee pension plans, something it disclosed last month.
Excluding one-time charges, Ford earned 12 US cents a share, three cents below what analysts had expected.
Revenue in the quarter fell 5 per cent to US$39.7-billion, above the US$36.5-billion Wall Street had expected.
Ford’s adjusted free cash flow fell 67 per cent in the fourth quarter to US$500-million, including the US$600-million cost of bonuses related to a new labour deal with the United Auto Workers union. The UAW deal also played a role in driving North American automotive profit margins down to 2.8 per cent in the fourth quarter.
Ford said its operating losses in China last year totalled US$771-million, including a loss of US$207-million in the fourth quarter. It lost US$1.5-billion in 2018. Ford’s market share in China in the fourth quarter fell to 2 per cent from 2.3 per cent last year.
In December, Ford said it would halve its operating loss in 2019 and nearly halve it again in 2020, followed by further improvement in 2021.
However, that forecast was before the appearance of a fast-spreading coronavirus in China, which has killed at least 420 people globally so far and crippled the country’s economy.
Ford’s China sales fell about 15 per cent in the fourth quarter and 26 per cent for the year as it continued to lose ground in its second-biggest market. Ford has been struggling to revive sales in China since its business began slumping in late 2017.
Detroit rivals General Motors Co. and Fiat Chrysler Automobiles NV are scheduled to report their results on Wednesday and Thursday, respectively.