Pension change brings Ford first quarterly net loss since 2014
Ford Motor Company reported its first quarterly net loss in two years due largely to pension accounting and costs associated with cancelling a small-car factory in Mexico.
The Dearborn, Michigan, automaker on Thursday reported a fourth-quarter net loss of US$783 million, compared with a US$1.9-billion profit a year ago.
The loss was due largely to a US$3-billion non-cash adjustment of its pension obligations, but a US$200-million charge for halting construction of the Mexican factory also weighed on profits. That was announced earlier this month amid criticism from President Donald Trump that Ford was shifting compact Focus production to Mexico.
Ford cancelled construction of the Focus plant in the fourth quarter, but still will shift production to the south in an existing factory. The company says no jobs will be lost due to the move because the current Focus plant near Detroit will build new a new, small pickup and SUV.
Ford still had a great full year. For 2016, the company posted its second-best pretax profit ever at US$10.4 billion with net income of US$4.6 billion. Full-year net income fell 36 per cent from a year earlier. Revenue for the year rose slightly to US$151.8 billion.
Ford's 56,000 US hourly workers will reap the benefits. They'll get average profit-sharing cheques of US$9,000 based on pretax North American profits of just over US$9 billion.
Ford says it lost 20 cents per share for the quarter, but excluding special items, it made a 30-cent profit. That fell just shy of Wall Street estimates. Analysts polled by FactSet expected 31 cents per share.
Quarterly revenue fell four per cent to US$38.7 billion, but still beat analyst estimates.
The fourth-quarter net loss was Ford's first quarterly red ink since the fourth quarter of 2014.
Chief Financial Officer Bob Shanks said the company is still trying to gauge the impact that President Donald Trump will have on the company, and hasn't taken any specific actions. But it expects pro-growth policies and a possible corporate tax cut.
"We're monitoring it very closely," he said.