Ford Posts Weak Q4 Earnings Losing $1.7 Billion

Can Hackett, well, hack it any longer?

Ford Motor Company lost $1.7 billion (42 cents a share) during Q4 2019 compared to a loss of $100 million, or 3 cents a share, year-over-year.  This  included a previously disclosed $2.2 billion charge for underfunded pensions. Adjusted for one-time items, Ford said it gained 12 cents a share during the year, compared with 30 cents a share a year ago.

Revenue fell 5% to $39.7 billion from $41.8 billion a year ago. Global sales, share, earnings, and profits all decreased. Warranty costs reached $5 billion in 2019, up $1.5 billion in recent years — and fixing vehicle launch problems that have also cost an estimated $1 billion.

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“Financially, the company’s 2019 performance was short of our original expectations, mostly because our operational execution, which we usually do very well, wasn’t nearly good enough,” said Chief Executive Jim Hackett in an understatement.

Ford declined to discuss the financial impact of the growing coronavirus epidemic in China on its earnings this year. It did, however, warn that during Q1 2020 it expects adjusted earnings dive more than $1.1 billion from the first quarter of 2019 because of it longstanding issues with higher warranty costs, lower vehicle volumes with concomitant lower results from Ford Credit. The ongoing autonomous vehicle investments remain a growing black hole for shareholders.

For full-year 2020, Ford predicts an adjusted free cash flow of $2.4 billion to $3.4 billion, and adjusted EBIT of $5.6 billion to $6.6 billion.