-
Ford continues its expansion to be an auto andmobility
company, providing details of its strategy and priorities to deliver
profitable growth going forward
-
Ford is fortifying its core business, building on leadership in
trucks, vans, commercial and performance vehicles, growing utility
vehicles and transforming underperforming areas, including luxury,
small vehicles and emerging markets
-
At the same time, the company is investing in emerging opportunities,
driving for leadership in electrification, autonomy and mobility
-
Ford expects the financial performance of its core business to
be strong through 2018 and its core business profitability to improve;
total company results decline in 2017 – as Ford invests in
emerging opportunities – and improve in 2018
Company Website:
http://corporate.ford.com/
DEARBORN, Mich. -- (Business Wire)
Ford Motor Company (NYSE: F) tells investors today the company is a
strong investment with attractive upside as it invests in emerging
opportunities and expands as an auto and mobility company.
During Investor Day presentations, Ford will outline the strategy and
priorities it is using to deliver profitable growth going forward. Ford
is evolving its business in three ways:
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Fortifying its core business by building on its global leadership in
trucks, vans, commercial and performance vehicles and growing in
global utility vehicles;
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Transforming traditionally underperforming parts of its core business,
including luxury, small vehicles and select emerging markets, and
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Investing and reallocating capital in the company’s emerging
opportunities, driving for leadership in electrification, autonomy and
mobility.
“During the past six months, we’ve been focused as a leadership team on
building Ford’s expanded business model – with a more clearly defined
vision, strategy and roadmap on how to deliver success,” said Ford
President and CEO Mark Fields. “We’ve been making important decisions
and have agreed on three key principles to guide future capital
allocation: where to play, where not to play and how to win.”
As Ford expands its business, it has committed to:
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Deliver growth that matches or exceeds global GDP;
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Improve its risk profile, maintaining a strong balance sheet and
reallocating capital to both its core business strengths and to
less-cyclical emerging opportunities;
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Deliver operating margins of 8 percent or more for its core business
and 20 percent or more for its emerging businesses, and
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Provide returns for investors in the top-quartile among Ford’s peer
group.
“As we expand to be an auto and a mobility company, we’re not moving
from an ‘old’ business to a ‘new’ business. We’re moving to a bigger
business,” Fields said. “The world is moving from simply owning vehicles
to owning and sharing them. That’s why we are expanding to sell more
vehicles and provide transportation services at the same time.”
CORE BUSINESS: Fortifying Ford’s Profit Pillars
Ford is focused on building on its clear global leadership in trucks,
vans, commercial vehicles and performance vehicles, while growing global
strength in utility vehicles. The company today has the world’s No. 1
best-selling full-size pickup with F-Series, the No. 1 best-selling
large van and bus with the Transit and the No. 3 best-selling compact
pickup with the Ranger.
Ford also has the world’s best-selling large utilities with Explorer and
Expedition, and the company aims to grow in other segments with four
all-new nameplates coming to its global utility vehicle lineup in the
next four years.
Performance leadership will continue, as Ford delivers 12 new
performance vehicles promised by the end of the decade. The vehicles
build on the huge market success of the Ford GT, Shelby Mustang GT350
and GT350R, Focus RS, Focus ST and F-150 Raptor.
Ford Credit – a growing business that delivers profits, distributions
and customer loyalty – is another key part of Ford’s plan to fortify its
profit pillars, as is the company’s successful Ford Customer Service
Division parts and service business.
CORE BUSINESS: Transforming Luxury, Small Vehicles and Emerging
Markets
Ford also is transforming traditionally underperforming parts of its
core business, including luxury, small vehicles and select emerging
markets.
Growing the company’s luxury position means fully transforming Lincoln
into a differentiated world-class luxury brand – in products and client
experiences – and delivering strong returns.
Already, Lincoln is showing momentum delivering four new
transformational vehicles in four years, establishing the brand in China
and growing global sales 77 percent since 2012. It also is improving
quality and boosting customer satisfaction in the U.S., with Lincoln
displacing Lexus for top ranking on the American Customer Satisfaction
Index.
In small vehicles, Ford is focusing on better brand resonance, tailored
designs, effective scale, a low-cost footprint and complexity reduction
– all to yield better profits.
These efforts already are paying off. In North America, for example,
Ford Focus buildable combinations have been reduced from 200,000 in 2015
to approximately 300 for the 2017-model year and 30 for the
next-generation Focus. That 99.9 percent complexity reduction will save
the company up to $300 per car.
Ford also is taking a new look at how to lead in select emerging
markets. The company sees Russia and South America positioned for
recovery, ASEAN remaining profitable and a path to profitable growth in
Middle East and Africa. As it pushes for a path to profitability in all
emerging markets, Ford is re-evaluating its strategy and business model
for India.
EMERGING OPPORTUNITIES: Leading in Electrification, Autonomy and
Mobility
Ford is investing in emerging opportunities, driving for leadership in
electrification, autonomy and mobility.
The company has nearly two decades of experience in electrification
and today is America’s top-selling plug-in hybrid brand and second best
seller in overall electrified vehicle sales. Ford is investing $4.5
billion in electrified solutions and introducing 13 new electrified
vehicles – representing 40 percent of its lineup – by 2020. This
positions Ford to be a leader in the growing electrified vehicle market,
as the number of electrified offerings is expected to exceed
conventional internal combustion vehicles in the 2030 timeframe.
Ford is focusing its electrified vehicles on its areas of strength –
commercial vehicles, trucks, utility and performance vehicles. Ford
today is working on vehicles as well as electrified vehicle fleet
management, route planning and telematics solutions.
The company also is aggressively growing its autonomy leadership.
Building on more than a decade of development experience, Ford intends
to have a high-volume,
fully autonomous SAE-defined level 4-capable vehicle in commercial
operation in 2021 in a ride-hailing or ride-sharing service. The vehicle
is being specifically designed for commercial mobility services without
a steering wheel or gas and brake pedals.
By targeting its autonomous vehicle for a ride-hailing or ride-sharing
service, Ford is changing the economics of mobility. Traditionally,
owning a vehicle has cost between 70 cents and $1.50 a mile. By
contrast, taking a taxi is four times more, and using ride-hailing is
double the cost of an owned vehicle. Ford’s autonomous vehicle with a
ride-hailing or sharing could reduce the cost to about $1 per mile – on
par or even less than personal ownership with a vehicle that can improve
safety, convenience and congestion.
Ford projects that autonomous vehicles could account for up to 20
percent of vehicle sales by the end of the next decade.
Similarly, the company’s focus on leadership in mobility starts
with the view that the world has moved from just owning vehicles to
owning and sharing them. To start, Ford is working
with global cities, starting in San Francisco, to help solve
congestion and help move people more efficiently. Ford will acquire
Chariot, a crowd-sourced shuttle service, to grow Ford’s dynamic shuttle
services globally. It will provide affordable transportation and expand
to at least five additional cities in 18 months.
The company also is partnering with Motivate, the global leader in bike
sharing, to add more transportation options for users with the new Ford
GoBike. When it launches next year, Ford GoBike will be accessed by
users through the FordPass®
platform.
Data collected from the bikes will be used to build an interconnected
mobility network. This could include real-time data, such as weather
conditions, usage patterns and bike availability, to optimize commuting.
Underpinning Ford’s electrification, autonomy and mobility businesses
are strategies being developed in fleet and data management, route and
journey planning and telematics.
2016-2018 Outlook
During its Investor Day, Ford also will review its financial outlook
through 2018, following record pre-tax profit, Automotive operating
margin and Automotive cash flow during the past 18 months.
This year, Ford expects total company adjusted pre-tax profit to be
about $10.2 billion1, lower than last year’s record but the
company’s second best year since 2000. The update to the 2016 outlook
reflects the recent expansion of a recall requested by the U.S. National
Highway Traffic Safety Administration.
Looking ahead, the company expects its core business adjusted pre-tax
profit to improve every year from 2016 through 2018.
Total company results, however, are expected to decline in 2017 compared
to 2016 and improve in 2018. The decline in 2017 is the result of
increasing investments and costs for emerging opportunities. Ford has
plans to achieve cost efficiencies averaging $3 billion annually between
2016 and 2018 and is adding new processes like zero-base budgeting to
further its business transformation. These efficiencies will offset the
vast majority of costs being added to strengthen Ford’s business except
for price-related design costs, regulatory costs and the cost to support
the development of emerging opportunities – especially electrification.
Total Automotive operating cash flow remains positive through 2018 –
with the overall cash balance expected to stay at or above the company’s
minimum target of $20 billion.
Capital allocation through 2018 will focus mainly on product, emerging
opportunities and shareholder actions. In line with this, Ford
reiterated its plan to pay regular dividends through a business cycle,
as well as pay a supplemental dividend when appropriate.
“We expect Ford’s performance to be strong through 2018 – with our core
business improving, allowing us to invest in the emerging opportunities
that will ensure our future success,” said Ford CFO Bob Shanks. “Our
capital allocation continues to be disciplined and to deliver strong
returns, and we are fully prepared for a downturn. As a result, we plan
to offer a secure regular dividend through the business cycle with an
option for upside on investments to keep our core business strong and to
win in emerging opportunities.”
Reference Information
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For presentation materials and information on how to join a webcast of
Ford’s 2016 Investor Day, click here.
1 Total company adjusted pre-tax profit is a non-GAAP
financial measure. Ford does not provide guidance on net income, the
comparable GAAP financial measure. Full-year net income will include
potentially significant special items that have not yet occurred and are
difficult to quantify prior to year end, specifically pension and OPEB
remeasurement gains and losses.
About Ford Motor Company
Ford Motor Company is a global automotive and mobility company based
in Dearborn, Michigan. With about 203,000 employees and 67 plants
worldwide, the company’s core business includes designing,
manufacturing, marketing and servicing a full line of Ford cars, trucks
and SUVs, as well as Lincoln luxury vehicles. To expand its business
model, Ford is aggressively pursuing emerging opportunities with
investments in electrification, autonomy and mobility. Ford provides
financial services through Ford Motor Credit Company.For more
information regarding Ford and its products and services, please visit www.corporate.ford.com.
Risk Factors
Statements included or incorporated by reference herein may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
based on expectations, forecasts, and assumptions by our management and
involve a number of risks, uncertainties, and other factors that could
cause actual results to differ materially from those stated, including,
without limitation:
-
Decline in industry sales volume, particularly in the United States,
Europe, or China, due to financial crisis, recession, geopolitical
events, or other factors;
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Decline in Ford’s market share or failure to achieve growth;
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Lower-than-anticipated market acceptance of Ford’s new or existing
products or services;
-
Market shift away from sales of larger, more profitable vehicles
beyond Ford’s current planning assumption, particularly in the United
States;
-
An increase in or continued volatility of fuel prices, or reduced
availability of fuel;
-
Continued or increased price competition resulting from industry
excess capacity, currency fluctuations, or other factors;
-
Fluctuations in foreign currency exchange rates, commodity prices, and
interest rates;
-
Adverse effects resulting from economic, geopolitical, or other events;
-
Economic distress of suppliers that may require Ford to provide
substantial financial support or take other measures to ensure
supplies of components or materials and could increase costs, affect
liquidity, or cause production constraints or disruptions;
-
Work stoppages at Ford or supplier facilities or other limitations on
production (whether as a result of labor disputes, natural or man-made
disasters, tight credit markets or other financial distress,
production constraints or difficulties, or other factors);
-
Single-source supply of components or materials;
-
Labor or other constraints on Ford’s ability to maintain competitive
cost structure;
-
Substantial pension and postretirement health care and life insurance
liabilities impairing liquidity or financial condition;
-
Worse-than-assumed economic and demographic experience for
postretirement benefit plans (e.g., discount rates or investment
returns);
-
Restriction on use of tax attributes from tax law “ownership change;”
-
The discovery of defects in vehicles resulting in delays in new model
launches, recall campaigns, or increased warranty costs;
-
Increased safety, emissions, fuel economy, or other regulations
resulting in higher costs, cash expenditures, and/or sales
restrictions;
-
Unusual or significant litigation, governmental investigations, or
adverse publicity arising out of alleged defects in products,
perceived environmental impacts, or otherwise;
-
A change in requirements under long-term supply arrangements
committing Ford to purchase minimum or fixed quantities of certain
parts, or to pay a minimum amount to the seller (“take-or-pay”
contracts);
-
Adverse effects on results from a decrease in or cessation or clawback
of government incentives related to investments;
-
Inherent limitations of internal controls impacting financial
statements and safeguarding of assets;
-
Cybersecurity risks to operational systems, security systems, or
infrastructure owned by Ford, Ford Credit, or a third-party vendor or
supplier;
-
Failure of financial institutions to fulfill commitments under
committed credit and liquidity facilities;
-
Inability of Ford Credit to access debt, securitization, or derivative
markets around the world at competitive rates or in sufficient
amounts, due to credit rating downgrades, market volatility, market
disruption, regulatory requirements, or other factors;
-
Higher-than-expected credit losses, lower-than-anticipated residual
values, or higher-than-expected return volumes for leased vehicles;
-
Increased competition from banks, financial institutions, or other
third parties seeking to increase their share of financing Ford
vehicles; and
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New or increased credit regulations, consumer, or data protection
regulations, or other regulations resulting in higher costs and/or
additional financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made
in preparing forward-looking statements will prove accurate, or that any
projection will be realized. It is to be expected that there may be
differences between projected and actual results. Our forward-looking
statements speak only as of the date of their initial issuance, and we
do not undertake any obligation to update or revise publicly any
forward-looking statement, whether as a result of new information,
future events, or otherwise. For additional discussion, see “Item 1A.
Risk Factors” in our 2015 Form 10-K Report, as updated by our subsequent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160914005562/en/
Contacts:
Ford Motor Company
News Media:
Brad
Carroll, 1-313-390-5565
Bcarro37@ford.com
or
Equity
Investment Community:
Dawn Dombroski, 1-313-845-2868
ddombros@ford.com
or
Fixed
Income Community:
Stephen Dahle, 1-313-621-0881
sdahle@ford.com
or
Shareholder
Inquiries:
1-800-555-5259
or
1-313-845-8540
Source: Ford Motor Company
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