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Why Ford's operating profit fell 28% in 2018 – The Motley Fool



Ford Motor Company (NYSE: F) reported a loss of 116 million dollars for the fourth quarter, which is more than the explanation related to pensions. But the company said fourth-quarter operating earnings, excluding retirement and other lump sums, fell 28 percent from the previous year to $ 1.5 billion in a sharp decline in China and Europe. Ford's year-over-year profit, excluding one-off, also fell 28 percent to 7 billion dollars.

Based on a share, excluding one-off items, Ford earned $ 0.30 in the fourth quarter and $ 1.30 for the whole year. Both were lower than Ford's results a year ago, according to the preliminary figures Ford released last week.

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Once again, Ford sold many F-series pick-ups at good prices in the US in 2018. helped Ford overcome challenges in other parts of the world. Image source: Ford Motor Company. Change to 2017 [19659908] Change to 2017 Revenue $ 41.8 billion Change to 2017 2.2% 2.2% 2.2% 2.2% ] 19659013] (196.59013) (196.59013) (196.59013) (196.59013) (196.59013) (196.59013) (196.59013) (196.59013) 19659013] (1,7%) Special items (before taxation) ($ 1,18 billion) 1,33 billion USD lower (1.43 billion US dollars) 1.14 billion USD. (19659013) ($ 116 million) $ 2.64 billion lower $ 3.68 billion (52.5%) Corrected Operating Cash Flow $ 1.5 billion (32%) $ 2.8 billion 19659013] (33%) Corrected earnings per share $ 0.30 [1] %) $ 1.30 (27%)

Data Source: Ford Motor Company. Wholesale shipments are rounded to the nearest thousand. "Corrected" figures exclude the effects of one-off items. EBIT = profit before interest and tax. Ppts = percentage points.

In Ford's fourth quarter, Ford sold a richer mix of vehicles at better prices than in the fourth quarter of 2017. and losses in Ford's Chinese joint ventures (which saw a sharp drop in sales) more than offset the good news. Ford also had to take a huge sum for a one-time fee of $ 877 million after the fall in the stock market in December left him with heavy losses on paper in his pension portfolios by the end of the year. This charge is the reason for the net loss of Ford's fourth quarter.

How to Implement Ford Business Units

Here's more detailed how Ford's business segments are performing. Keep in mind that all financial results in this section are reported based on EBIT, except as noted. Ford has earned $ 2 billion in North America in the fourth quarter, compared with $ 1.8 billion a year ago, as improvements in the combination of products that sold (more SUVs and more) trucks in terms of cars) and net prices were sufficient to compensate for higher costs for goods and withdrawal costs. Ford's EBIT margin in North America was 7.6%, compared with 7.3% a year ago.

For the whole year, Ford earned $ 7.6 billion in North America, down from $ 8.1 billion in 2017

South America: Ford lost $ 199 million in South America in the fourth quarter, about $ 10 billion worse than a year ago. Ford gained significant gains from net prices (improvement of $ 270 million compared with a year ago), but they were more than offset by weaker domestic currencies and inflationary effects. For the whole year, Ford lost $ 678 million in South America, an improvement of $ 75 million. Ford lost $ 199 million in 1917 In Europe in the fourth quarter. from a profit of $ 89 million in the prior period. Ford again managed to win the price profits on the basis of several new products, but these gains were more than offset by unfavorable exchange rate movements and higher costs, including the costs of launching the all-new Focus in the region. . For the whole year, Ford lost 398 million dollars in Europe, compared to profits of 367 million dollars in 2017

The Middle East and Africa: Ford Losses $ 49 million here in the fourth quarter improvement of $ 17 million compared to the previous period. Lower costs and price gains led to improvement. Throughout the year, Ford lost only $ 7 million in the region in 2018, a significant improvement over the $ 246 million loss reported a year ago. The Ford lost $ 381 million in the fourth quarter, compared to a $ 30 million profit during the previous period. Asia-Pacific Region: The results of this region include Ford's joint ventures in China, as well as operations in India, Southeast Asia and Oceania. Fourth quarter history: China has done badly, the rest has done well. Ford lost $ 534 million in China while the rest of the region made a profit of $ 153 million

For the whole year, the region lost $ 1.1 billion: $ 1.54 billion loss in China, $ 444 in the rest of the region. Ford Mobility is part of Ford's Mobility, which includes Ford's autonomous vehicle efforts and Ford Smart Mobility initiatives, which lost $ 195 million in the fourth quarter, compared to $ 100 million dollars a year ago. The story is simple: Ford has increased its costs on both fronts.

Throughout the year, mobility reported a loss of 674 million dollars, against a loss of 299 million dollars in 2017

Ford Credit: Ford's pre-tax profit for financing closed-end banks was $ 663 million. In the fourth quarter, an increase of $ 610 million a year ago. Ford deserves a "favorable residual rental yield" for most of the improvement – Ford's extra cars receive good auctions for second-hand cars.

  Blue 2019 Ford Focus ST, a sports hatch on a European street.

The costs of launching a brand new Focus hurt Ford's performance in Europe in 2018, but that should help Ford achieve better results in 2019. Image Source: Ford Motor Company.

For these large one-time charges

In the fourth quarter Ford took a total of 1.179 billion dollars a single time. A large portion of these, $ 877 million, consisted of unconsolidated fees associated with the annual revaluation of Ford's pensions, as noted above. The remainder included $ 262 million toll-related fees, and a $ 40 million toll on the closure of Ford Chariot's coach bus. Debt, Liquidity, and Guidance

Ford finished 2018 with $ 23.1 billion in cash for its automotive business, down from $ 26.5 billion by the end of 2017 There were an additional 11.1 billion Credit lines for a total liquidity of $ 34.2 billion. Against this, it had $ 14.1 billion in well-structured long-term debt, down 16.5 billion dollars at the end of 2017

Ford did not make any changes to the guidelines issued on 16 January.


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