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By Ben Klayman and Paul Lienert
DEARBORN, Mich. (Reuters) – Ford Motor (NYSE:) Co on Tuesday posted a fourth-quarter loss and provided a weaker-than-expected 2020 forecast due to continued higher warranty costs, investments in future transportation and lower results from Ford Credit, sending shares down 9.5% in after-hours trading.
“The results were not OK 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.”
The No. 2 U.S. automaker said it expects 2020 operating earnings to be in the range of 94 cents to $1.20 a share. Analysts were expecting $1.26 a share.
The disappointing 2020 forecast, coming after Ford previously trimmed its 2019 outlook, is a blow for Chief Executive Jim Hackett. The former head of furniture maker Steelcase took over Ford in May 2017 after the abrupt ouster of Ford veteran Mark Fields.
Hackett 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 (DE:) and the sale of its money-losing operations in India to a venture controlled by India’s Mahindra & Mahindra.
By Ford’s own accounting, the restructuring is far from complete. It has booked $3.7 billion of the projected $11 billion in charges it previously said it would take, and expects to book another $900 million to $1.4 billion this year.
For the fourth quarter of 2019, Ford reported a net loss of $1.7 billion, or 42 cents a share, compared with a loss of $100 million, or 3 cents a share, a year earlier.
The quarter included a loss of $2.2 billion due to higher contributions to its employee pension plans, something it disclosed last month.
Excluding one-time charges, Ford earned 12 cents a share, three cents below what analysts had expected.
Revenue in the quarter fell 5% to $39.7 billion, above the $36.5 billion Wall Street had expected.
Ford’s adjusted free cash flow fell 67% in the fourth quarter to $500 million, driven by the $600 million cost of bonuses related to a new labor 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% in the fourth quarter.
Detroit rivals General Motors Co (NYSE:) and Fiat Chrysler Automobiles are scheduled to report their results on Wednesday and Thursday, respectively.
In October, Ford cut its 2019 profit outlook, blaming higher warranty and incentive costs, as well as lower-than-expected sales in China.
(This story was refiled to fix garbled headline)
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