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Home / Business / Ford CEO plans $ 11.5 billion more cuts

Ford CEO plans $ 11.5 billion more cuts



Ford Motor Co. is sharpening its blades by splitting another $ 11.5 billion in spending plans and killing several sedans, including the Fusion and Taurus, to prematurely reach a hard-to-reach profit margin target.

The automaker expects to save $ 25.5 billion by 2022, Chief Financial Officer Bob Shanks told reporters Wednesday, as Ford reported earnings per share in the first quarter and earnings exceeded estimates. The company now expects a profit margin of 8 percent by 2020, two years earlier than desired.

The cuts are aimed at starting a turnaround that Ford escaped even when the board ousted its chief executive officer almost a year ago. New CEO Jim Hackett is trying to convince investors that betting on a rebound is worth the bet by setting up a plan to get rid of slow-selling, low-margin car models and focus the company on more lucrative sports utility vehicles and trucks. This is similar to the road map Fiat Chrysler Automobiles NV followed on the road to pushing Ford into North American profitability.

"Everything will be on the table" to fix Ford, Shanks told reporters in Dearborn, Michigan, at the company headquarters. "We can make various investments, we can become partners, we can leave products, markets – and we will do that."

Changing lanes

When Ford lost its profitability in North America, Fiat became Chrysler

Source: Company Registrations


Ford reported adjusted earnings for the first quarter of 43 cents a share, which is the 41-year average analyst estimate Cents corresponds. Automotive sales rose to $ 39 billion, exceeding the $ 37.2 billion average forecast in a Bloomberg study.

Extreme Sentiment

The stock rose 3 percent to $ 11.44 at 17:08. in New York, after the end of regular trading. Before the report, the stock had fallen by more than 11 percent this year.

"The mood is extremely low," wrote Adam Jonas, an analyst at Morgan Stanley, who had just upgraded Ford to a purchase, in a report last week. "Our discussions with investors indicate a low level of confidence in Ford's earnings power and strategic vision, and the product portfolio is outdated and overburdened with passenger car segments."

Ford expects raw material costs to be 1.5 this year Billions of dollars, including about $ 500 million in the first quarter, Shanks said. The automaker started the year marking investors that more expensive raw materials including steel and aluminum would contribute to the 2018 profit decline.

Killing the Cars

Ford said it will not invest in new generations of sedans for the North American market, eventually reducing its car line to the Mustang and a completely new Focus Active crossover coming out next year. By 2020, nearly 90 percent of its portfolio in the region will be pick-ups, SUVs, and commercial vehicles, the company said.

This marks the end of the road for slow-selling sedans like the Taurus, Fusion and Fiesta in the US The automaker noticeably dropped the Lincoln Continental and MKZ sedans from its hit list, but since these models share mechanical fundamentals with Ford siblings, theirs Future also in doubt.

Marked for Death: Detroit Ditching Cars to Mint Money Off Trucks

Investors had been impatient with additional details on the loss-making models Ford would give up – and with signs of a turnaround, the efforts would bear fruit.

"It's not that the market has given up good news on a long-term basis at Ford," said David Whiston, an analyst at Morningstar Inc., who recently lowered his valuation for the stock to the equivalent of a holding. "But most people do not expect it by the end of 2019 or 2020 and that brings the joker of" Will we be in recession by then? "


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