Followers | 689 |
Posts | 143817 |
Boards Moderated | 35 |
Alias Born | 03/10/2004 |
Sunday, November 11, 2018 4:17:23 PM
By: Motley Fool | November 11, 2018
Do these numbers show that Ford is finally turning around?
Ford Motor Company's (NYSE:F) second-quarter earnings report contained several big surprises, and they weren't the kinds of surprises that investors like. Among them: a loss in Europe, despite sales that seemed strong; a big loss in China, once a Ford success story; and a revelation that Ford's ongoing restructuring effort will cost $11 billion when all is said and done.
With Ford's third-quarter report on Oct. 24, executives tried to make the case that while it isn't easy to see yet, Ford is now moving in the right direction. They noted that some parts of Ford's global business are already working quite well, and they said they're making progress in their efforts to boost or rework the underperforming parts of the business.
Here are eight of the numbers they cited to make their case.
$105 million
China used to be a growth story for Ford -- and a profit story, too. But over the past couple of years, things have gone in the wrong direction. Sales have fallen as Ford's products have aged, and the company's operations in the country have begun losing money -- a whopping $483 million in the second quarter.
Ford posted another loss in China in the third quarter, but it wasn't quite as bad: $378 million, an improvement of $105 million. CFO Bob Shanks said that improvement should be seen as a sign of progress: Ford has done a lot to address the underlying issues that have held its China operation back, it has a strong new leader for the business, and it has a slew of new products that have just begun to roll out.
Shanks wasn't willing to commit to a specific deadline for a return to profitability in China, but he argued strongly that things are finally moving in the right direction.
$678 Million
That was the pre-tax profit for Ford Credit, the in-house bank that provides leases and financing to Ford customers and dealers. It's notable for two reasons: First, it's the best quarterly profit for Ford Credit in seven years, meaning that business is very good. Second, most of that profit will return to Ford as cash. That's a change.
Until recently, most of the cash generated by Ford Credit was reinvested in its business, to support a larger total of outstanding loans and leases. But Ford has decided to cap Ford Credit's receivables: Its profits will now return to its owner, Ford, as dividends.
$5 million
That's the amount that Ford's automotive "structural costs," the huge fixed costs related to its automotive business, fell year over year. That's a tiny number in context, but the fact that it fell at all is a big deal. Ford's structural costs have been growing for years, as Ford's revenue has grown, limiting the company's profitability.
Last year, CEO Jim Hackett set a goal of reducing the pace of cost growth by 50%. In an interview, Shanks told me that keeping structural costs essentially flat year over year was a "proof point" showing that Hackett's efforts are taking hold.
10%
Ford's effective tax rate in 2017 was 15.3%; for 2018 it had originally guided to a somewhat lower rate of 13%. Last week, it changed its guidance: It now expects to pay an effective tax rate of 10%. Shanks said that Ford now has a better understanding of the new U.S. tax laws, which has helped it optimize its tax planning.
Why does it matter? Lowering Ford's tax rate from 13% to 10% should add roughly $175 million to $200 million to Ford's full-year bottom line.
$47 million
That was the third-quarter profit in Ford Middle East and Africa, the company's smallest regional business unit. Started a few years ago, it has been a quiet work in progress, intended mostly to position Ford as a major competitor as auto sales in the region grow over the next decade.
But the little regional unit is starting to make its presence felt on Ford's bottom line. That $47 million profit was up $103 million from a $56 million loss in the third quarter of 2017. Shanks called it out as another bright spot in Ford's business: "It's a small market, but it's 1.3 billion consumers, and it's going to grow dramatically over the next 10 years. And we're already starting to see the ability to be profitable there."
5.6%
European sales of Ford's Transit line of commercial vans grew 5.6% in the third quarter, versus just a 0.5% gain for Ford's overall sales in the region. That's a clue to how Ford plans to boost the profitability of its business in Europe, which posted a $245 million loss last quarter.
Shanks told me that Ford is in the midst of planning a major "redesign" of its Europe business to improve its profitability over the long haul. "That [redesign] will take time to play out," Shanks said, "but it will be a substantially different-looking business when that's done versus what it is today."
What will that look like? Shanks wasn't ready to say. But he did make a point of calling out Ford's commercial-vehicle business in Europe as a bright spot.
$0.15
That's Ford's current quarterly dividend per share. It's also the quarterly dividend per share that Ford plans to continue paying "through the cycle," meaning through the next recession -- whenever it arrives.
Analysts have been skeptical, but Ford has said repeatedly that unless things get dire, it will stand by that plan -- and that it has the cash reserves and the cash flow to do so, thanks in part to the profits now flowing from Ford Credit. Both Hackett and Shanks reiterated those points during Ford's earnings call.
9%
That's what Ford's EBIT-adjusted margin in its Asia Pacific region would be if China were excluded. The Asia Pacific region posted a $208 million loss in the third quarter. But Shanks noted that excluding China, the region made a profit of $170 million at a solid 9% margin. It's another place where Ford's business is working pretty well at the moment.
Read More »»»
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
Recent F News
- AIG names new CFO; Progyny Drops 24% After Losing Key 2025 Contract; Exicure Jumps 190% With Nasdaq Extension • IH Market News • 09/19/2024 10:26:48 AM
- Ford Motor Company Sued for Securities Law Violations - Investors Should Contact The Gross Law Firm for More Information - F • PR Newswire (US) • 09/19/2024 09:45:00 AM
- BMW, Ford and Honda Begin Operations of Vehicle-Grid Integration Joint Venture ChargeScape; Name Joseph Vellone CEO • PR Newswire (US) • 09/18/2024 12:30:00 PM
- Stingray Debuts Karaoke on Ford Vehicles: F-150 Lightning and Mustang Mach-E • GlobeNewswire Inc. • 09/17/2024 12:00:00 PM
- The Gross Law Firm Announces the Filing of a Securities Class Action on Behalf of Ford Motor Company(F) Shareholders • PR Newswire (US) • 09/16/2024 09:45:00 AM
- The Gross Law Firm Announces the Filing of a Securities Class Action on Behalf of Ford Motor Company(F) Shareholders • PR Newswire (US) • 09/16/2024 09:45:00 AM
- Form 8-A12B/A - Registration of securities [Section 12(b)]: [Amend] • Edgar (US Regulatory) • 09/13/2024 08:34:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/13/2024 08:30:07 PM
- OpenAI Unveils Strawberry AI Model Series; Boeing Stock Falls 4% Amid Strike; HR Surges 20% on Growth Forecast • IH Market News • 09/13/2024 10:12:55 AM
- Universal Technical Institute and Ford Celebrate 25 Years of Ford's Manufacturer Specific Advanced Training (MSAT) Program • PR Newswire (US) • 09/12/2024 08:15:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/12/2024 12:02:23 PM
- Ted Cannis to Retire After 35-Year Ford Career; Andrew Frick Named Interim Ford Pro Leader; Daniel Justo Appointed Head of FCSD • Business Wire • 09/12/2024 12:00:00 PM
- Class Action Filed Against Ford Motor Company (F) Seeking Recovery for Investors - Contact The Gross Law Firm • PR Newswire (US) • 09/12/2024 09:45:00 AM
- Ford Motor Company Sued for Securities Law Violations - Contact the DJS Law Group to Discuss Your Rights - F • PR Newswire (US) • 09/11/2024 12:30:00 PM
- U.S. Futures Drop Ahead of Inflation Data; Oil Rises on Hurricane Francine • IH Market News • 09/11/2024 10:29:19 AM
- GameStop plunges 11% on stock offering, DJT drops post-debate, GSK fails shingles vaccine trial • IH Market News • 09/11/2024 10:25:41 AM
- Southern California Edison and Ford Team Up to Reward Electric Vehicle Customers for Supporting the Grid • Business Wire • 09/10/2024 04:04:00 PM
- Ford Motor Company Class Action: The Gross Law Firm Reminds Ford Investors of the Pending Class Action Lawsuit with a Lead Plaintiff Deadline of October 7, 2024 - F • PR Newswire (US) • 09/09/2024 09:45:00 AM
- Broadcom Down 10% Post-Earnings, UiPath Up 8%; Qualcomm Eyes Intel Assets; Salesforce Acquires Own Company • IH Market News • 09/06/2024 11:59:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:52 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:42 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:32 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:12 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:02 PM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM