Ford loses $1.7 billion in fourth quarter on flawed Explorer launch, labor costs, China

DEARBORN, Mich. – Ford Motor lost $1.67 billion during the fourth quarter, missing Wall Street earnings expectations, on higher North American warranty costs tied to its flawed relaunch of the Explorer, increased labor costs and global restructuring spending.

Ford shares plunged by more than 10% during after-hours trading Tuesday to about $8.30 per share. The company released its earnings after the markets closed.

The company disappointed Wall Street with its earnings projections for 2020. It’s projecting full-year earnings of  between 94 cents and $1.20 a share, or adjusted earnings before interest and taxes of $5.6 billion and $6.6 billion.

The company made $6.4 billion in 2019. Ford expects adjusted free cash flow of between $2.4 billion and $3.4 billion in 2020.

Here’s what Wall Street expected, according to Refinitiv consensus estimates:

• Adjusted earnings: 12 cents per share versus 15 cents per share expected
• Automotive revenue: $36.7 billion versus $36.49 billion expected

Wall Street is paying close attention to the progress made under Ford CEO Jim Hackett’s $11 billion global restructuring plan as well as the automaker’s operations in China. Through the third quarter, the restructuring charges totaled $3.3 billion, or 30%, of the planned $11 billion through the early 2020s.

Much attention is expected to be on the progress made under Ford CEO Jim Hackett’s $11 billion global restructuring plan as well as the automaker’s operations in China. Through the third quarter, the restructuring charges totaled $3.3 billion, or 30%, of the planned $11 billion through the early 2020s.

The Dearborn, Mich.-based automaker last month said it expects to take a pretax hit of about $2.2 billion in the fourth quarter due to contributions to its employee pension plans and retirement benefits.

In October, Ford lowered its 2019 earnings guidance by $500 million to between $6.5 billion and $7 billion. Ford also shaved 3 cents off of the top range of its earnings per share forecast, to between $1.20 and $1.32 per share.

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