Ford loses US$1.28B in 2020, raises electric vehicle spending

DETROIT, United States (AP) – Ford Motor Company lost US$1.28 billion last year as it dealt with a huge restructuring, a costly recall, and a decline in the value of its pension fund.

But the company said yesterday it is generating strong cash flow and will go all-in on electric vehicles. Ford said it would now spend at least US$22 billion developing them through 2025, nearly double what it previously announced.

The automaker said that, excluding one-time items, it made 41 cents per share for the year. That beat Wall Street estimates of breaking even. Revenue for the year was US$127.1 billion, down 18 per cent from 2019. Analysts expected US$128.2 billion in revenue for the year.

Ford also lost US $2.8 billion in the fourth quarter. Excluding one-time items it made 34 cents per share, according to FactSet. That also beat Wall Street expectations of a 7-cent-per-share loss.

Before taxes, the company made US$1.7 billion for the year, but it was brought down by restructuring costs in Europe, South America, and elsewhere. Also contributing were a US$610-million Government-ordered recall of 2.7 million vehicles with dangerous Takata air bag inflators and a US$1.2 billion one-time accounting charge for falling pension fund values.

The company predicted a return to more normal profits in 2021, forecasting US$8 billion to US$9 billion in pre-tax earnings. That includes a US$900 million gain on its investment in electric vehicle start-up Rivian, as well as any adverse impact from a shortage of semiconductor chips now hitting the global auto industry.

Ford said that, despite the annual loss, it generated US$1.9 billion in free cash flow in the fourth quarter, giving it a year-end cash balance of nearly US$31 billion to help its investment in electric vehicles.

Despite the increased electric vehicle investment, Chief Financial Officer John Lawler stopped short of matching rival General Motors’ goal of selling only all-electric light vehicles by 2035.

Lawler said the company is focused on bringing electric vehicles to market quickly. The company’s electric Mustang Mach E SUV is already on sale, it expects to start selling an electric Transit full-size van this year and an all-electric F-150 pickup next year, he said.

“We’re focused on making a difference now,” Lawler said.

In North America, by far Ford’s most profitable region, the company made US$1.1 billion before taxes, up 53 per cent, due largely to the cost of putting a new United Auto workers’ union contract in place in 2019. Union workers will get profit-sharing cheques of about US$3,625 each in March, based on the North American profits.

Ford announced its results after the markets closed yesterday.

The company’s shares rose 1.9 per cent in after-hours trading to US$11.59.