Ford tumbles the most in 2 years after 2014 profit forecast cut

Ford Motor Co. (NYSE:F) slumped the most since December 2011 after the automaker said the cost of bringing the most vehicles ever to market will lead to a decline in its pretax profit next year.

The shares fell 8.2% to $15.33 at 10:58 a.m. in New York, after trading as low $15.31 for the biggest intraday decline since Dec. 8, 2011. Through yesterday’s close the stock had advanced 29% this year, outpacing a 25% gain for the Standard & Poor’s 500 Index.

Ford will earn $7 billion to $8 billion next year after an estimated $8.5 billion pretax profit for 2013, the Dearborn, Michigan-based company said in a statement. The second-largest U.S. automaker said last week that it plans to introduce 23 new vehicles globally in 2014, more than double this year’s total.

“We are investing across the world to support next year’s launches, but also to drive profitable growth beyond 2014 as we serve more customers in more markets and in more segments,” Chief Financial Officer Bob Shanks said in the statement.

Ford’s outlook reflects a bet that it can continue growing as the company prepares for the eventual departure of Chief Executive Officer Alan Mulally. Automakers face pressure to lower their prices of outgoing models when new vehicles are on the way, and costs generally rise at plants that have to be re-tooled and readied to build the updated cars and trucks.

While Ford has said it continues to plan for Mulally to remain CEO through at least 2014, the 68-year-old is a candidate to lead Microsoft Corp., people familiar with the search have said.

Succession Clarity

“Investors don’t like the lack of clarity on succession, but it’s not as if with Mulally gone, things will go off track,” Emmanuel Rosner, a New York-based analyst for CLSA Americas LLC, said by telephone before Ford issued its forecasts. “The company is on track in most regions at this point, and even for the regions that are underperforming, there is a good plan.

Ford expects that automotive revenue will rise about 10% in 2013 from $126.6 billion last year, Shanks told analysts and reporters today in New York. That’s in line with the $139.6 billion average estimate of 11 analysts, Bloomberg data shows.

Ford said it is broadly on track with its outlook for the middle of this decade that the company first presented during a June 2011 investor day. The automaker expects to sell 8 million vehicles a year during this time frame. Ford sold 5.3 million in 2010, the company said.

The company’s projection that global automotive profit margins will rise to 8% to 9% by mid-decade is the only projection that is at risk, according to a slideshow presentation.

By region, Ford expects pretax profit in 2014 to decline in North America, where it will introduce 16 new vehicles. The company projected that its pretax results in Europe will improve and be in line with 2013 in South America and the Asia Pacific region.

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