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Affected by Brexit and consumer preference for SUVs and crossover vehicles, Ford's European operations recorded pre-tax losses of $ 73 million in the first quarter, compared to a profit of $ 88 million year.
Announcing Ford Financial Results, Managing Director Jim Hackett said, "We are extremely dissatisfied with our performance in Europe." For this year, the US company plans to report losses in the region after gaining $ 234 million in 2017.
Bob Shanks, the company's chief financial officer, says that most Ford vehicles in Europe are not profitable [19659002] The Kuga crossover, Transit and Ranger vans and "some imported vehicles" are profitable in Europe, said Shanks without naming the imported cars. The European market could also bring the Edge crossover and Mustang sports model.
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Shanks explained that vehicles accounted for more than 200% of Ford's profits in Europe, although they represent less than half of the revenues.
Jim Farley, Head of Global Markets at Ford, said that commercial vehicles accounted for 13% of profit margins Ford will change its strategy and focus on SUVs, crossovers and commercial vehicles to achieve its goal. reach a profit margin of 6% in the region, said Farley
"We really need a major shift in the European market, we will focus on profitable operations in the LVC segment (light commercial vehicles and the SUVs are part of that plan, "said Farley. 19659011] Renault's efforts to … ” class=”lazyload img-thumbnail”/>
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Ford is currently selling three crossovers in Europe: EcoSport, Kuga and Edge. In the second quarter of 2018, shipments of Kuga and EcoSport to the European market reached record levels, the US company reported.
The compact C-Max pickup truck is doing well in Europe, which could lead Ford to stop model production in the region
In the first half of this year, C-Max deliveries dropped by 18 percent 31,888 units, according to JATO Dynamics
In addition to focusing on SUVs and light commercial vehicles, Ford plans to continue "aggressive" cost reductions and launch new products faster in Europe
In June , the company announced that it would close the gearbox factory in Blanquefort (Bordeaux, southwestern France) if you can not find a buyer.
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Bob Shanks said that Ford will count more on partnerships to rebuild his business European Union. "It is important to recognize that partnerships are already an integral part of our European operations and we expect that they will play an even bigger role in the future," said Ford Financial Director.
Ford has a long-term partnership with the French car manufacturer PSA
In June, it signs an agreement with the German Volkswagen AG for a potential alliance of commercial and other commercial vehicles segment projects
Ford reviews its earnings estimates this year the cause of declining sales, China's tariffs, the difficulties it faces in the European market, and warned that it could record costs $ 11 billion over the next five years as a result of corporate restructuring
25% for steel imports and 10% for aluminum imports, came into force on March 23 and June are also applied to producers in the EU. These prices could cost Ford this year about $ 1.6 billion in North America, said Bob Shanks, chief financial officer of the auto company.
Ford shares fell 3.7% Wednesday on the New York Stock Exchange
"It is clear that there will be a major and deep restructuring that will really solve the business areas the weaker, "said Bob Shanks. He added that Ford will improve the performance of these sectors or sell them.
In the second quarter of 2018, Ford's net profit fell by nearly 50%, according to analysts, due to a fire at a component supplier caused the interruption of the production of vans while sales are falling and tariffs have affected China's results. In the first five months of 2018, Ford's sales in the world's largest auto market dropped by 22 percent, and between April and June 2018, Ford's China operations recorded pre-tax rates of $ 483 million.
Ford announced that it was working to reduce the costs of its subsidiary in Europe, focusing on profitable models and significant restructuring operations.
This year, Ford would record an adjusted profit of $ 1.30 – $ 1.50 per share, compared to previous forecasts of $ 1.45 to $ 1.70 per share, while analysts expect at $ 1.52.
In the second quarter of 2018, Ford's net income fell to $ 1.07 billion, or $ 0.27 per share, from $ 2.05 billion or $ 0.51 per share in the first quarter. same period in 2017. Analysts expected earnings of $ 0.31 per share between April and June 2018. [19659002] In April, Ford announced the acceleration of its plan to reduce costs and profit margins, including including the abandonment of traditional sedan models in North America, which are no longer popular with customers.
The company is now planning to cut costs by 2022 by 2022, $ 5 billion, up from $ 14 billion announced in the fall.
Ford General Manager Jim Hackett told investors that the company would be the subject of a "deep refocusing" process. operations and could abandon some unprofitable business
& # 39; & # 39; We will do the necessary restructuring and take decisive action. We will allocate money to the healthy part of our business and we will abandon marginal operations, "said Hackett.
Ford expects a global profit margin of 8% by 2020 and about 10% in America
Ford Motor, the second largest automaker in the United States, has about 197,000 employees and 67 factories around the world
The Ford subsidiary in Romania confirmed in May that it will manufacture a second model at the Craiova plant. "The new model will be added to the production of the current generation of the small Ford EcoSport SUV and the engine EcoBoost 1.0 Ford also invests up to 200 million euros in Craiova, the total investment began in 2008, reaching nearly 1.5 billion "
Photo courtesy of Shutterstock / Philip Lange
