Ford delivered a record financial performance in 2015, including a return to profitability in Europe, and expects 2016 to be another strong year for the automaker as truck and utility sales grow and mobility becomes a larger part of the mix.
“We promised a breakthrough year in 2015, and we delivered,” Ford CEO Mark Fields says. “In 2016, we will continue to build on our strengths and accelerate our pace of progress even further, while transforming Ford into both an auto and a mobility company and creating value for all of our stakeholders.”
Ford posted a $10.8 billion pre-tax profit for the year, up $3.5 billion, on revenue of $149.6 billion. Net income surged to $7.4 billion, up $6.1 billion from 2014. North America led the way with a $9.3 billion profit, up $1.9 billion, while profit was up $1.4 billion from markets outside North America, highlighted by Europe’s renewed profitability with $259 million in the black.
Bob Shanks, executive vice president and chief financial officer, notes Europe’s positive fourth-quarter performance marked the region’s third consecutive quarter of profitability. The company expects higher growth in 2016.
Shanks says Ford is strong in all parts of the business, with global market share up 0.2 percentage points for the year despite economic headwinds in South America, where the company saw a 33% drop in business.
Lack of long-term prospects for profitability led to a decision this week to cease sales in Japan and Indonesia, but Fields tells WardsAuto Ford has no specific plans to pull out of additional markets at this time.
The investment in an all-aluminum-bodied F-150 pickup is paying dividends, Shanks says, and is part of a 16% average return on investment over the past five years. The Ford Mustang became the best-selling sports car in the world in its first year on the global market, Fields adds.
Sustained Growth Expected in 2016
Looking ahead to 2016, Ford expects steady or slightly increased volume in the U.S., Europe and China, with continued declines in South America. The company projects equal or higher revenue, operating margin and profits in 2016 as it launches the F-Series SuperDuty trucks.
In contrast to competitors who are suggesting that the car market may be vanishing, Ford is maintaining its current mix of cars to trucks and utilities. The company is using plant downtime to keep car volume in check while adding truck capacity to meet higher demand, Fields says.
“We’ll just work our process of matching production to demand,” he says. “We feel very strongly it’s important to have a balanced portfolio” to respond to consumer demand and potential regulatory changes.
Fields adds that while mobility and connectivity is becoming a larger part of Ford’s focus as it identifies partners and opportunities going forward, the car business remains central. Fields this week was elected to the IBM board of directors effective March 1.
“We said we’re transforming into an automobile and mobility company. It’s important that we don’t lose sight of our core business,” Fields says.
