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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 Edge Crossover and the Mustang Sports Model could also be on the European Market
Shanks explained that vehicles account for more than 200% of Ford's profits in Europe, although they account for less than half of the revenues
Jim Farley, According to Ford, commercial vehicles are responsible for 13% of the company's profit margins across Europe.
Ford Will Change Strategy and Focus on SUVs, Crossovers and Commercial Vehicles To achieve its goal of achieving a 6% profit margin in the region, Farley said:
"We have certainly need a major change in the European market, we will focus on profitable operations in the LVC segment (1969002) Currently, Ford sells three crossover vehicles in Europe: EcoSport, Kuga and Edge, and in the second quarter of 2018, deliveries of K uga and EcoSport to the European market have reached a record level, informs the American company
The C-Max compact van has underperformed in Europe, which could lead Ford to stop production of this model in the region
In the first half of this year, C-Max supplies dropped 18 percent to 31,888 units, showing data from JATO Dynamics.
In addition to oncentrer on SUVs and light commercial vehicles, Ford plans to continue its "aggressive" (19659002) In June, the company warns that it will close the gearbox plant in Blanquefort (Bordeaux, south West of France) if it does not find a buyer.
Bob Shanks said Ford would rely more on partnerships to turn its European business around. "It's important to recognize that partnerships are already an integral part of our operations in Europe and we expect to play an even bigger role in the future," said Ford's chief financial officer.
Ford has a long-term partnership with the French car manufacturer PSA
In June, it signed an agreement with the German Volkswagen AG for a potential union sector and other projects [19659002] Ford has revised its estimates for this year's earnings the cause of declining sales, China's tariffs, the difficulties it faces in the European market, and warned that it could see the costs business up to $ 11 billion over the next five years
25% on steel imports and 10% on aluminum imports, entered into the March 23 and since June 1, they are also applied to the producers of 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 disruption in the production of popular vans, while that sales are declining and that tariffs are affecting China's performance. In the first five months of 2018, Ford's sales in the world's largest automotive market dropped by 22 percent, and between April and June 2018, Ford's operations in China dropped by $ 483 million before taxes.
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 capita, compared to $ 2.05 billion or $ 0.51 per share for the same period last year. 2017. Analysts were expecting earnings of $ 0.31 per head between April and June 2018. [19659002] In April, Ford announced the acceleration of the cost reduction plan and the following year. increased profit margins, including the renunciation of traditional models of North American sedans, which are no longer popular among customers.
The company now has the intention, by 2022, and cut costs by $ 25.5 billion, compared with $ 14 billion in fall sales.
Ford General Manager Jim Hackett told investors that the company would move away from deep-focus operations and dropping some unprofitable activities
. We will make the necessary restructuring and take decisive action. We will allocate money to the healthy part of our business and we will abandon marginal operations, "added Hackett.
Ford expects a global profit margin of 8% from here 2020 and about 10% in America
Ford Motor, the second largest automaker in the United States, has about 197,000 employees and 67 plants worldwide
Ford's subsidiary in Romania confirmed in May that she will manufacture a second model at the Craiova plant. "The new model will be added to the current generation of the small SUV Ford EcoSport class and the Ford EcoBoost 1.0 engine also invests up to 200 million euros in Craiova, total investment began in 2008, reaching nearly 1.5 billion "
Source: AGERPRES
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