Tag Archive | "Ford Motor Co."

Ford Says Market Share May Slip


DETROIT – Ford Motor Co. is likely to lose market share this year in the U.S., the first decline since 2008, the company’s head of North and South America said Wednesday.

Despite a market-share loss, Ford should generate higher than previously thought margins and profit in North America, Americas chief Mark Fields said at an investor’s presentation hosted by Bank of America .

Ford raised its forecast for U.S. industry sales to between 14.5 million and 15 million vehicles, including sales of medium- and heavy-duty vehicles, up from its previous target range of 13.5 million to 14.5 million, according to The Wall Street Journal.

Mr. Fields said capacity constraints because of the faster-than-expected growth may lead to the lower market share for Ford, but could also mean higher pricing and margins for its vehicles.

Ford gained market share in the U.S. for three straight years, touching 16.8 percent in 2011, after hitting a low of 14.4 percent in 2008. But in the first quarter of 2012, its share is off 0.8 percentage point compared with a year earlier. The company changed its forecast of a stable share to a declining share.

Ford this week reported that its U.S. sales rose 5 percent in March and that it had record deliveries of its compact Focus compact as well as strong sales of its full-sized F-series pickups.

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Ford Awards Mulally $58.3 Million in Stock


Ford Motor Co. awarded Chief Executive Officer Alan Mulally $58.3 million in stock as a reward for the automaker’s turnaround.

Ford paid the stock to its top executive as part of an incentive plan for 2009, according to filings yesterday with the U.S. Securities and Exchange Commission. Ford earned $29.5 billion in the last three years after $30.1 billion in losses from 2006 through 2008. The shares, which traded as low as $1.01 on Nov. 20, 2008, closed yesterday in New York at $12.09.

Mulally will receive other compensation for 2011, including salary and benefits, which will be revealed in a proxy report in the coming weeks. Dearborn, Michigan-based Ford withheld some of the stock award to cover Mulally’s income taxes. After taxes, Mulally received $34.5 million in stock. Ford has awarded him stock worth more than $100 million the past two years, reported Bloomberg.

“Our compensation philosophy is to align the interests of our leadership with those of our shareholders,” Todd Nissen, a spokesman, said yesterday in an e-mail. “Ford’s stock was $1.96 a share at the time of the 2009 awards, and is over $12 a share today. That is a more than a 500 percent increase, which benefits all stakeholders in the Ford turnaround.”

Last July, United Auto Workers President Bob King assailed Mulally’s compensation as “outrageous” and “excessive.” Last year, Ford rewarded Mulally with $56.6 million in stock. The executive’s 2010 compensation rose 48 percent to $26.5 million.

In his new awards, Mulally, 66, also received 1.28 million stock options with a strike price of $12.46, which he can begin to exercise next year, and he was awarded 376,016 restricted stock units that can be converted into shares in 2014.

Executive Chairman Bill Ford, 54, received 595,238 stock options with a strike price of $12.46, the first of which he can exercise next year, and he was awarded 175,473 restricted stock units that can be converted into shares in 2014, according to a separate filing with the SEC.

General Motors Co. CEO Dan Akerson, whose pay must be approved by the Obama administration’s special pay master, said Jan. 10 that he won’t get a cash bonus for 2011, the year the Detroit-based automaker earned a record profit and again became the world’s largest.

Akerson, who served as CEO for four months in 2010, received $2.53 million in total compensation for that year, including a $566,667 salary and $1.96 million in stock awards and other pay, GM said in a proxy statement last year. His annual salary was $1.7 million, the filing said.

Volkswagen AG Chief Executive Officer Martin Winterkorn was the highest paid CEO in Germany in 2010, with total compensation of 9.3 million euros ($12.2 million), a study from the DSW association for private investors showed.

Nissan Motor Co. Chief Executive Officer Carlos Ghosn received 982 million yen ($12.2 million) in total compensation for the 2010 fiscal year, including salary and stock options, making him the highest-paid leader among Japanese companies.

Toyota Motor Corp. President Akio Toyoda was paid 136 million yen in the year ended March 31, 2011, including a 24 million yen bonus, according to a filing last year to Japan’s finance ministry.

Ghosn’s pay was lower than the 2010 average for global automotive companies, estimated at about $15.3 million by Towers Watson & Co., a U.S. benefits consultant. Mulally’s 2010 compensation was the highest in the auto industry, the consultant said.

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2 Executives at Ford to Retire; Inside Successors Named


DETROIT — Ford Motor Company on Thursday announced the retirement of two members of its management team who were integral to its financial recovery and product renaissance.

The retirements of Lewis Booth, the company’s chief financial officer, and Derrick M. Kuzak, its global product chief, had been expected. But their departures will test Ford’s ability to continue its revival through leadership team changes, according to The New York Times.

There was no indication that Ford’s chief executive, Alan R. Mulally, would leave at any time soon. However, the retirements of Mr. Booth and Mr. Kuzak narrowed the field of potential successors to Mr. Mulally and indicated that Ford was beginning to reshape its executive team for the future.

“I have no plans to retire and am absolutely thrilled and honored to continue to serve Ford,” Mr. Mulally, 66, said in a conference call with reporters.

But, he added, Ford is concentrating on developing new senior executives to continue its comeback. “Our plan is to have a very strong succession plan for every position, including my own,” he said.

Mr. Booth, 63, will be succeeded by Robert L. Shanks, who is Ford’s controller and has also been closely involved in the turnaround of its North American operations.

Mr. Kuzak, 60, will be replaced by Raj Nair, who is vice president of engineering and global product development.

Both changes will become effective April 1, the company said.

Mr. Booth, who once was considered a possible successor to Mr. Mulally, has led Ford’s financial team during a critical period in which it has paid down debt and restored its stock dividend.

He was viewed by analysts as more than a financial specialist, someone who advised Mr. Mulally on strategic moves such as selling the Volvo luxury division.

Mr. Kuzak’s influence as group vice president for global product development has been profound. He was hand-picked by Mr. Mulally, who joined the company in 2006, to oversee Ford’s transition from a truck-heavy product lineup to one that features smaller, more fuel-efficient passenger cars.

“Lewis Booth and Derrick Kuzak represent the very best of Ford and our culture, and built a legacy of leadership, integrity and commitment to excellence that will benefit us for years to come,” said William Clay Ford Jr., the company’s executive chairman.

In an unrelated move, Ford also announced that Jon M. Huntsman Jr., the former Utah governor and Republican presidential candidate, was elected Wednesday to Ford’s board.

Mr. Mulally deflected questions about further personnel moves, including the possibility of Ford’s appointing a chief operating officer to be groomed to succeed him eventually.

“The entire team continues to get stronger and stronger,” Mr. Mulally said. “But nothing is changing about the way we operate.”

Brian Johnson, an analyst with Barclays Capital, said the moves put Ford in a better position for whenever Mr. Mulally does retire.

“Who knows when Alan’s going to retire? All we know is it’s happening at some point, and it would make sense that you have the go-forward team in place before the C.E.O. leaves,” Mr. Johnson said.

He said product development and financial management are among the most important areas for an automaker to have strong leadership, and the ability of the new leaders to have a good working relationship with each other is critical to Ford’s success.

Unlike its Detroit rivals General Motors and Chrysler, Ford’s turnaround was accomplished without a government bailout or a deep restructuring in bankruptcy court.

Instead, Ford, which is based in Dearborn, Mich., has become financially stable and increased its United States market share to 16.8 percent by shedding brands, integrating global business units and producing fewer models, but ones that can be sold in every region of the world.

The company reported $8.8 billion in pre-tax operating profits in 2011, the third consecutive year it has posted improved earnings. At the end of the year, its cash reserves exceeded its debt by $9.8 billion, an $8.4 billion improvement from the previous year.

But industry analysts have expressed concern that Ford’s results may plateau because of increased competition from G.M. and Chrysler, more gains by Hyundai and Volkswagen, and the budding comebacks of Toyota and Honda.

Much attention will be paid to how Ford introduces new versions of two top sellers, the Fusion midsize sedan and Escape sport utility vehicle. Mr. Kuzak, the architect of Ford’s product revival, said that globalized vehicle platforms will continue to generate a variety of fresh models.

“You will see an increase in the cadence from us on new products,” Mr. Kuzak said Thursday. He said Ford is focusing on delivering higher profit margins by adding features and technology consumers will pay more to get.

Mr. Nair has an operational background in Asia, where Ford is investing heavily in new factories and a broader range of product offerings. “It’s certainly a focus going forward,” he said.

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Ford’s Mulally Says Not Retiring as Two Executives Depart From Automaker


Ford Motor Co. Chief Executive Officer Alan Mulally, saying he has no plans to retire, said his top finance executive and product-development chief will depart.

Chief Financial Officer Lewis Booth and Derrick Kuzak, group vice president of global product development, will retire April 1, Mulally said today on a conference call with reporters. Booth, 63, will be replaced by Bob Shanks, 59, the company’s controller. Kuzak, 60, is being succeeded by Raj Nair, 47, vice president of engineering and global product development, according to Bloomberg.

Mulally, 66, denied speculation that he is planning to retire by the end of next year. He has overseen three consecutive years of profits at Ford by focusing on improving quality and adding fuel-efficient models like the Fiesta subcompact. He came to Ford from Boeing Co. in 2006, as the Dearborn, Michigan-based automaker was beginning three years of losses that would total $30.1 billion.

“I read the news release very carefully and I do not find my name in it,” Mulally said of the company statement announcing the retirements of Booth and Kuzak. “I have no plans to retire and I’m absolutely thrilled and honored to serve Ford.”

Mulally declined to say if his successor will be Mark Fields, 51, Ford’s president of the Americas, or Joe Hinrichs, 45, chief of Ford’s operations in Asia and Africa.

Each is considered a potential successor to Mulally, with Fields viewed as the leading candidate, people familiar with the deliberations have said.

“I have read that speculation also and as you know we don’t comment on speculation,” Mulally said of the possibility of Fields or Hinrichs replacing him as CEO.

“Our plan at Ford is to have a very strong succession plan for every position, including my own.”

Mulally said he is not considering appointing a chief operating officer or an executive to act as his second in command. He said he prefers to have responsibilities divided among regional leaders and executives overseeing specific skills, such as engineering and marketing. He meets with those executives every Thursday in the “Thunderbird room” at Ford’s headquarters for what he calls the “business plan review.”

“We’re all there, we’re all at the table and we’re using everybody’s skills,” Mulally said. “That’s the way we operate and that’s the way we plan to operate going forward.”

Booth’s retirement smooths succession at Ford because Mulally isn’t stepping down soon, Joseph Spak, an analyst with RBC Capital Markets in New York, said in research note.

“Booth’s retirement now aids transition in succession planning at Ford as it spaces the retirement of the CFO and the (eventual) retirement of CEO Mulally,” wrote Spak, who has an “outperform” rating on Ford. “We believe Mulally is likely to stick around at least through 2013, but continue to believe an insider is likely replacement.” Fields, who is also an executive vice president, is the “front runner,” Spak said.

Shanks and Nair have worked closely with the executives they are replacing and will continue the turnaround plan Mulally started in 2006, he said.

Shanks, who joined Ford in 1977, previously worked alongside Booth at Ford of Europe, on the automaker’s since- divested luxury-car lines and at Mazda Motor Corp., in which Ford previously had controlling interest. Nair, who started at Ford in 1987, was previously vice president of operations in the automaker’s Asia and Africa region, which Mulally is targeting for growth.

“We’re just very pleased to have such a strong bench,” Mulally said. “These two individuals have grown up with this plan and they’re absolutely committed to it, they understand it and, with their experience, I think we’re not going to miss a beat.”

Ford’s board of directors yesterday also elected former Republican presidential candidate Jon Huntsman to the board, effective immediately. Huntsman, 51, former U.S. ambassador to China and governor of Utah, is chairman of the Huntsman Cancer Foundation.

Huntsman becomes the 15th member of the board, which also includes Richard Gephardt, a former majority leader of the U.S. House of Representatives and a candidate for the Democratic Party’s presidential nomination in 1988 and 2004.

Ford reported its 11th consecutive profitable quarter Jan. 27, with net income of $13.6 billion, or $3.40 a share, boosted by a one-time tax gain of $12.4 billion. For all of 2011, Ford’s profit excluding some items was $8.8 billion, or $1.51 a share, up $463 million from the previous year.

Ford had $13.1 billion in automotive debt as of Dec. 31, more than U.S. rivals, because it borrowed $23 billion in late 2006, after Mulally arrived from Boeing and before credit markets froze. That enabled the automaker to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. and Chrysler Group LLC in 2009.

Ford fell 1.2 percent to $12.69 at the close in New York. The shares have gained 18 percent this year after falling 36 percent last year.

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Ford Cruises, but Woes Loom


Ford Motor Co. posted record fourth-quarter profit on a one-time tax allowance, but economic troubles in Europe, growing pains in Asia and heightened competition at home signaled greater turbulence this year.

The heady profit gains of 2011 now are colliding with Europe’s debt crisis and heavy investments in Asia that generated losses in the two regions in the latest quarter. Ford’s home market again was lifted by strong sales gains even as tougher competition ate into per-vehicle profits, reported The Wall Street Journal.

The company forecast earnings this year would be flat compared to 2011’s strong profits, suggesting a period of stable profitability. It also said its share of rising U.S. sales this year would match, or rise only slightly, from the year-ago level.

In a sign of rising competition and cost pressures, Ford said its pre-tax per-vehicle profit in North America last quarter fell to $1,317, its lowest of the year and down from a peak of $2,806 in the first quarter last year.

“We met most of our objectives despite a number of challenges,” Ford Chief Financial Officer Lewis Booth said of the quarter ended Dec. 31 during an interview on Friday. “We saw the external environment deteriorate. Europe is challenging and will remain challenging for some time.”

Its North American operations earned $889 million last quarter, compared with $670 million for the same period a year earlier. The company countered rising cost for steel and other materials by boosting vehicle prices. However, its loss in Europe widened to $190 million from $51 million while its Asia Pacific and Africa unit, which includes Thailand, swung to a loss of $83 million.

The company’s record quarterly profit stems from a $12.4 billion gain from an accounting change to reverse a valuation allowance it made against deferred tax assets in 2006. Ford reversed the allowance in light of recent profits.

Net income was $13.6 billion, or $3.40 a share, compared with $190 million, or five cents, a year earlier. Revenue for the quarter was $34.6 billion.

Excluding the one-time gain, profit was $1.1 billion, or 20 cents a share, below analysts’ reduced estimate of 25 cents a share that reflected the slowdown in Europe and flooding in Thailand that reduced production by 34,000 vehicles last quarter. The Dearborn, Mich., auto maker reported a 30 cent-a-share profit in last year’s fourth quarter.

Ford shares recovered somewhat from an early drop and were off 3.6 percent to $12.28 in afternoon trading on Friday.

“There’s no way of sugar coating the fact that the quarter was light,” said Jefferies & Co. auto analyst Peter Nesvold in a research note on Friday. “However, the details suggest automotive margins will be up year-over-year in 2012.”

Results show how the debt crisis in Europe is affecting profitability. Ratings firm Moody’s Investors Services said on Thursday it expects new-vehicle sales to fall 6.2 percent in the Western European countries this year compared with 2011, with the steepest decline in France.

“There is a lot of overcapacity in the industry, and that is causing an increase in the level of incentives,” Ford’s Mr. Booth said. It is too soon to say whether Ford’s European operations would be unprofitable again this year, he said.

The auto maker had warned earlier this month its Asia, Pacific and Africa business unit would report a loss on lost production caused by Thai flooding. Ford’s Thailand assembly plant wasn’t directly affected. Supplier plants were affected, which halted or slowed the flow of parts to the plant.

“We do see Asia-Pacific being modestly profitable this year,” Mr. Booth said.

Overall, Ford said its automotive pre-tax operating profit this year will improve from last year while earnings at Ford Motor Credit will be lower than in 2011. Total pre-tax operating profit is expected to be equal to 2011. Capital expenditures during the year will be between $5.5 billion and $6 billion as it continues adding plants, especially in Asia.

For the year, the company reported a net profit of $20.2 billion, or $4.94 a share, compared with $6.6 billion, or $1.66, a year earlier. The earnings represent the third straight annual profit for the auto maker, which sidestepped the need for a government bailout and avoided bankruptcy protection, unlike Chrysler Group LLC and General Motors Co.

The results also give Ford its most profitable year since 1998, when it reported income of $22.1 billion, bolstered by the sale of lending arm The Associates, which it had acquired 10 years earlier.

Separately, the auto maker said it will make profit-sharing payments to about 41,600 U.S. hourly employees based on its 2011 financial performance. Ford will pay each worker $6,200. Half of that amount was paid in December, and the remaining will be paid in March. The company said it also plans to make a $3.5 billion contribution to its global pension plans during the new fiscal year.

The company said it still plans to produce 675,000 cars and trucks in North America during the current quarter, an increase of 18,000 vehicles over last year’s quarter. It plans to cut first-quarter output throughout the rest of the world, and especially in Europe where production plans will be trimmed by 36,000 vehicles to 410,000 new cars and trucks during the quarter.

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Ford Falls Short of Profit Estimates


Ford Motor Co. posted fourth-quarter profit that fell short of analysts’ estimates as overseas operations dragged down results while a one-time tax gain resulted in the company’s biggest annual profit since 1998.

Ford reported its 11th consecutive profitable quarter, with net income of $13.6 billion, or $3.40 a share, compared with $190 million, or 5 cents, a year earlier. Excluding one-time costs, the profit was 20 cents a share, trailing the 25-cent average estimate of 15 analysts surveyed by Bloomberg.

It was the third straight annual profit for Chief Executive Officer Alan Mulally, 66, who has improved quality and expanded the lineup with fuel-efficient models like the Fiesta subcompact. Net income was boosted by a non-cash gain of $12.4 billion from eliminating a valuation allowance against deferred tax benefits, Ford said.

“It was another good solid year, but the gains weren’t quite as dramatic as in previous years,” said Efraim Levy, an analyst for S&P Capital IQ, who has a “buy” rating on Ford. “It will get tougher going forward.”

Ford slid 4.5 percent to $12.21 at the close in New York. The shares are up 13 percent this year after falling 36 percent in 2011.

Ford removed the valuation allowance, created in 2006 as it began reporting operating losses, because it expects to be profitable in the future and to use the tax benefits, according to a U.S. regulatory filing last year. Ford lost $30.1 billion from 2006 to 2008, as truck and sport-utility vehicle sales collapsed and the economy fell into the worst recession since the Great Depression.

“They’re telling the world that they’ve attained a level of confidence in their ability to generate substantial amounts of income for the foreseeable future,” said Robert Willens, a corporate tax specialist and president of Robert Willens LLC of New York. “It’s quite a positive, forceful statement on their ability to prosper going forward.”

Profit excluding some items for 2011 was $8.8 billion, or $1.51 a share, up $463 million from the previous year.

In the fourth quarter, the Dearborn, Michigan-based automaker was hamstrung by a weakening European market and flooding in Thailand that wiped out profits in its Asian operations, Chief Financial Officer Lewis Booth said today.

The fourth-quarter earnings miss was caused by “the external environment, the slightly greater impact than we anticipated of commodity costs, currency and the Thai floods,” Booth told reporters in Dearborn.

Ford spent $2.3 billion on commodities such as steel in 2011, more than the $2.2 billion it told analysts in October it would spend, Booth said.

The European market is deteriorating and Ford is not sure when it will turn around, Booth said. Ford declined to provide a forecast on whether it can make money in Europe this year.

“We think this has the potential to be another tough year economically in Europe,” Booth said on the “The Hays Advantage” on Bloomberg Radio. “We’re not making any predictions about Europe this year.”

There is too much automotive factory capacity in the region, which is causing automakers to boost incentives, Booth said. Ford increased incentives in the fourth quarter, while still improving net prices, he said.

Ford said its pretax operating loss in Europe widened to $190 million from a loss of $51 million a year earlier. In Asia- Pacific and Africa, Ford reported a pretax operating loss of $83 million, down from a $23 million profit last year. For the full year, Ford lost $92 million in Asia-Pacific and Africa and it lost $27 million in Europe.

“We’re obviously a little disappointed to be at just slightly worse than break-even for Europe,” Booth said in an interview. “We think of Europe as a solid business operating in a very difficult business environment. That business environment will turn at some stage.”

Ford’s outlook for Europe seems “a big optimistic,” said Matthew Stover, an analyst at Guggenheim Securities LLC in Boston. “We think that you’re going to have to see production reduced” and a loss for the year of $1.5 billion in Europe, he said.

Ford is on pace to meet its mid-decade goal of increasing global sales by 50 percent, Booth said. The automaker lost 34,000 vehicles of production to the Thai floods, which was more than it was expecting, he said.

“We expect overall to see Asia-Pacific to be steadily profitable, but we expect to see some spiking in the quarters because it is a volatile region,” the finance chief said. “We expect Asia-Pacific to be modestly profitable this year.”

Ford is building seven factories in the Asia-Pacific region and introducing new models in China and India, such as the EcoSport small SUV it introduced in New Delhi this month. This year in China, Ford will begin selling the Kuga SUV, which is based on the Escape SUV sold in the U.S.

“In the forward years, you can expect to see the pace in Asia-Pacific and Africa being relatively modest for the early part,” Booth said. “Then accelerating for the later part of the period as the plants come onstream and the new products come on stream.”

Ford said its fourth-quarter automotive operating margin fell to 2.2 percent from 3 percent a year earlier.

In North America, where Ford generates most of its sales and profits, the second-largest U.S. automaker reported pretax operating income of $889 million, up from $670 million last year. Ford’s U.S. sales rose 11 percent last year and it gained market share for the third consecutive year for the first time since 1970.

“Ford is still a North American company,” said Brian Johnson, an analyst with Barclays Capital. “In 2012, we’re looking for the U.S. sales rate to recover, their market share to remain solid and their pricing to remain solid with products like the Escape and the Fusion refreshed” with new styling.

Fourth-quarter sales rose 6.5 percent to $34.6 billion as Ford boosted North American production by 14 percent during the period to 674,000 cars and trucks. The average estimate for total fourth-quarter revenue was $33.5 billion, according to the average of four estimates.

Ford reiterated it will produce 675,000 cars and trucks in North America during the first quarter, up 18,000 vehicles from last year. Ford said today it will cut production in South America, Europe and Asia Pacific Africa this quarter.

Globally, Ford said it plans to produce 1.4 million cars and trucks in the first quarter, down 51,000 vehicles from last year.

For the year, Ford’s revenue rose 13 percent to $136.3 billion, compared with an average forecast of $134.7 billion from five analysts surveyed.

U.S. consumers paid an average of $32,028 for the company’s models last year, up 25 percent from 2002 and the highest price Ford vehicles have ever commanded, according to online auto researcher Edmunds.com.

Automotive debt, which excludes Ford Motor Credit, was $13.1 billion at year’s end, an increase from $12.7 billion on Sept. 30, the company said.

The debt rose in the quarter primarily because it tapped loans from the U.S. Department of Energy that boosted its obligations by $300 million, the automaker said. The federal loans are being used to produce fuel-efficient cars.

Ford has more debt than rivals because it borrowed $23 billion in late 2006, after Mulally arrived from Boeing Co. and before credit markets froze. That enabled the automaker to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. and Chrysler Group LLC in 2009.

The company will contribute $3.5 billion this year to its global pension plans, including $2 billion to the U.S. plan.

Ford said it will pay $2,450 to each of its 41,600 U.S. hourly workers for second-half 2011 profits.

“Ford’s doing everything right except getting their stock price up,” said Gary Bradshaw, a fund manager at Dallas-based Hodges Capital Management, which owns about 250,000 Ford shares. “They’ve got their costs down, good products, good engineering and good leadership. Ford can do surprisingly well this year.”

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