FORD warned yesterday that the cost of launching new vehicles and a deteriorating Venezuelan economy would dent its profit next year, news that sent the US’ second-largest automaker’s shares to their biggest one-day percentage drop in more than two years.
The Detroit-based company said its mid-decade target for a global automotive profit margin of eight to nine per cent was also at risk. Ford expects a global pre-tax profit next year of between $7bn to $8bn.
That is lower than the projected $8.5bn expected in 2013, which is set to be one of the most profitable in the company’s 110-year history, Ford said. Much of that amount – about $8.34bn – is estimated to come from North America. It was the first time Ford has provided its forecast for 2014 results.
“Today’s announcement is Ford’s attempt to keep expectations in check,” Stifel Nicolaus analyst James Albertine said, calling 2014 a “transition year.”
In Europe, Ford expects the overall market to improve. Once it gets beyond its restructuring expenses of $400m in 2013 and 2014, the company expects to be profitable on the continent.