Ford shares tumbled Monday after the automaker said it will fall short of its full-year profit goals.
At a conference for investors, the Dearborn, Michigan-based automaker said it expects a pretax profit of around $6 billion this year, down from the $7 billion to $8 billion it previously forecast.
CFO Bob Shanks said record profits in North America aren’t enough to offset trouble in South America, where Ford expects to lose $1 billion this year, and Russia, where falling sales and the rapid deterioration of the ruble took the company by surprise. Warranty costs – including a $500 million charge for last week’s recall of 850,000 vehicles for defective air bags – are also higher than expected.
“We know this year is going to be short of plan, but we also have to keep an eye on the future,” Shanks said.
Shanks said Ford expects a pretax profit of $8.5 billion to $9.5 billion in 2015, based partly upon an expected recovery in South America and improvement in warranty costs. The company also plans fewer vehicle introductions in 2015, which will cut costs. Ford is introducing 23 vehicles worldwide this year; next year, it plans to introduce 16.
Longer term, the company said it expects to grow global sales by as much as 55 percent by 2020, to 9.4 million cars and trucks. That’s partly based on expected strong growth in Asia, where Ford is opening five plants over the next year.
As recently as July, Ford said it was on track to make a profit in Europe in 2015. Ford hasn’t made a full-year profit in the region since 2010.
Investors’ hopes grew when Ford earned $14 million in Europe in the second quarter of this year. But the company now says it expects a pretax loss of $1.2 billion in Europe in 2014 and a loss of $250 million in 2015. Ford expects to lose $300 million in Russia alone.
Ford shares fell more than 7 percent to close at $15.11 Monday.