Jump to content

New Facebook Pages

Ford Mach E

Ford Thunder

  • Custom Search


Sign in to follow this  
jpd80

Ford wants to double 2019 operating profits, Hackett says

Recommended Posts

Ford wants to double 2019 operating profits, Hackett says

DAVID SHEPARDSON and BEN KLAYMAN

 

DETROIT -- Ford Motor Co. CEO Jim Hackett told employees late on Thursday the company would not accept last year's "mediocre" results and said Ford was aiming to nearly double its annual operating profit. Hackett made his comments in an email to employees that was seen by Reuters.

Ford is restructuring its global operations, including recent plans to make cuts in Europe. It also has announced an alliance in commercial vehicles with Germany's Volkswagen Group, with plans to jointly develop electric and self-driving vehicles, in moves meant to save billions of dollars.

Ford on Wednesday reported a 2018 operating profit of $7 billion with a profit margin of 4.4 percent, down from 6.1 percent in 2017. Ford said last week that its target for operating margin was more than 8 percent.

'Mediocre by any standard'

"2018 was mediocre by any standard," Hackett said in the email. "Yes, we made $7 billion last year. But think of it this way: this represents a 4.4 percent operating margin, about half what we believe is an appropriate margin. So we are aiming for much closer to $14 billion."

Hackett did not give a timetable for hitting the $14 billion target. A Ford spokesman said Hackett was simply doing the math to show employees how the margin target translated to overall profit.

Hackett, who has been on the job for 20 months, also said that it was "time to bury the year (2018) in a deep grave, grieve over what might have been and become super focused on meeting, and, in fact, exceeding this year's plan."

Share this post


Link to post
Share on other sites

...layoffs and plant closures...or..sell the biz to VW....i dont see any other way how you get there

Edited by snooter

Share this post


Link to post
Share on other sites

Build quality first and the profits will follow. Cost cutting will not fix this.  

Share this post


Link to post
Share on other sites

This is Hackett simply doing math on $140 billion revenue and saying that at 10% return, a$14 Billion profit is possible.

However, he has given no details of the plan to achieve that goal....

First, he has to stem losses across $40 billion revenue in Europe/ROW and turn that into $4 billion profit...good luck with that.

Edited by jpd80

Share this post


Link to post
Share on other sites
54 minutes ago, jpd80 said:

This is Hackett simply doing math on $140 billion revenue and saying that at 10% return, a$14 Billion profit is possible.

However, he has given no details of the plan to achieve that goal....

First, he has to stem losses across $40 billion revenue in Europe/ROW and turn that into $4 billion profit...good luck with that.

Oh for Pete’s sake - what do you want him to do - reveal every new vehicle they’re working on for the next 4 years and show the expected revenue and profit margin?

Aviator, Explorer and Ranger should be highly profitable this year replacing Taurus and Focus sales.  I still think Ranger will allow them to reduce incentives on F150 XL and XLTs. 

Share this post


Link to post
Share on other sites
1 hour ago, akirby said:

Oh for Pete’s sake - what do you want him to do - reveal every new vehicle they’re working on for the next 4 years and show the expected revenue and profit margin?

Aviator, Explorer and Ranger should be highly profitable this year replacing Taurus and Focus sales.  I still think Ranger will allow them to reduce incentives on F150 XL and XLTs. 

I think he's alluding to the fact that for decades now, Ford has had no idea what to do with any market outside of North America and by all indications that isn't changing any time soon. 

Share this post


Link to post
Share on other sites

Correct.

it's got nothing to do with USA, that market is highly profitable, a dead set money earner that is being improved, what about everywhere else.

akirby, I agree with your estimate on replacement revenue being much better and Ranger being the perfect offset or replacement  for low end F150 incentives. Again, the US market is just a massive cash cow, the rest of the world is where big changes are needed and Hackett needs to man up and own them.

In Europe and ROW, there's basically $40 billion revenue that's frankly not producing any nett income, something he needs to address. There's an April event for Ford Europe, that would be perfect for Hackett  to reveal  his road map to salvation for Europe and global operations. Everything ROW stems from European vehicles, if they are faltering or not working, then the ROW will equally falter. Fix one and you fix the other.

 

 

 

 

Edited by jpd80

Share this post


Link to post
Share on other sites

I think he’s addressing it by cutting costs and vehicles and partnering with VW or getting out of the market altogether.

Share this post


Link to post
Share on other sites

The EU has been a basket case for over 20 years now-why is so hard to make money there? What about the other players (outside of VW?) can compete there?

Share this post


Link to post
Share on other sites
3 hours ago, silvrsvt said:

The EU has been a basket case for over 20 years now-why is so hard to make money there? What about the other players (outside of VW?) can compete there?

Part of it is that they are locals and a lot of sales preference goes to VW group, Peugeot ect...remember that Ford is still an outsider in Europe.

Like the US, Ford has been caught in a huge shift away from cars to utilities and Ford Europe's sales are heavily skewed to Fiesta and Focus.

 

And FYI, Ford Europe's profits helped to carry Ford NA when it was in the shitter 12 years ago

Edited by jpd80

Share this post


Link to post
Share on other sites

Ford has been in europe specifically german prior to ww2....so have the other former big 3....ford is not an outsider to europe....id start selling f150's in europe

Edited by snooter

Share this post


Link to post
Share on other sites
5 hours ago, snooter said:

Ford has been in europe specifically german prior to ww2....so have the other former big 3....ford is not an outsider to europe....id start selling f150's in europe

 Ford is only strong in Germany, UK, France, Italy and maybe Spain, those five countries equal about 80% of sales.

Share this post


Link to post
Share on other sites
5 hours ago, jpd80 said:

 Ford is only strong in Germany, UK, France, Italy and maybe Spain, those five countries equal about 80% of sales.

Not a bad set of countries if one considers global GDP

Share this post


Link to post
Share on other sites
2 hours ago, passis said:

Not a bad set of countries if one considers global GDP

While that's true, approximately 50% of Ford's sales in Europe are Fiesta and Focus but since the model changeovers last year, all the high series buyers have deserted Ford. It's just breath taking how quickly the market changed away from Ford's car and MPV products. I suspect that this is why Ford is in disarray, it was obviously hoping that the new Fiesta and Focus would stabilize sales and income while Ford addressed the rest of its showroom.

It's underscoring that gap year Ford suffered thanks to Mr. Fields, everything is 12 months late or still coming (Escape and Puma). The biggest criticism of One Ford is that it's just too slow delivering new products, in the rest of the world, it is notorious for doing a couple of  three year MCEs to get nine years or more out of product cycles, you just can't do that against good competition.

Edited by jpd80

Share this post


Link to post
Share on other sites

Fiesta and Focus are selling well. Fiesta is the 5th and Focus is the 15th best seller vehicle in Europe in 2018. The problem is that the People Movers are selling slowly (S-Max, C-Max, Galaxie) and the Ford offer of SUVs/Crossover is very old and incomplete: they need a new small C Crossover aditional to the new Kuga (Escape), a new 3 row C crossover, a new B crossover (the EcoSport is very old), a new small B crossover and, maybe, a big D class crossover (Explorer?) to replace the Galaxie/S-Max.

Share this post


Link to post
Share on other sites
11 hours ago, falconlover 1 said:

Fiesta and Focus are selling well. Fiesta is the 5th and Focus is the 15th best seller vehicle in Europe in 2018. The problem is that the People Movers are selling slowly (S-Max, C-Max, Galaxie) and the Ford offer of SUVs/Crossover is very old and incomplete: they need a new small C Crossover aditional to the new Kuga (Escape), a new 3 row C crossover, a new B crossover (the EcoSport is very old), a new small B crossover and, maybe, a big D class crossover (Explorer?) to replace the Galaxie/S-Max.

Well, sounds like a few of those holes are about to be filled (Escape/Kuga, hopefully Maverick, that spied crossover, and they could ship over Explorer if they want to).

Share this post


Link to post
Share on other sites
19 hours ago, falconlover 1 said:

Fiesta and Focus are selling well. Fiesta is the 5th and Focus is the 15th best seller vehicle in Europe in 2018. The problem is that the People Movers are selling slowly (S-Max, C-Max, Galaxie) and the Ford offer of SUVs/Crossover is very old and incomplete: they need a new small C Crossover aditional to the new Kuga (Escape), a new 3 row C crossover, a new B crossover (the EcoSport is very old), a new small B crossover and, maybe, a big D class crossover (Explorer?) to replace the Galaxie/S-Max.

By Ford's own account the only vehicles making money there are Kuga, Edge and Ranger, all the rest do not make money.

The  fix is new Kuga and small C SUV "puma" later this year followed by more Utilities in 2020, anything but cars and MPVs.

Edited by jpd80

Share this post


Link to post
Share on other sites

Jacque Nassar sold off Ford's HD truck production because it "only" made 3%-4% profit.

Getting rid of the consistent losers like all of South America is step one.  Unless there is a "good" Brexit, FoE is next on the chopping block.

Share this post


Link to post
Share on other sites
36 minutes ago, theoldwizard said:

Jacque Nassar sold off Ford's HD truck production because it "only" made 3%-4% profit.

Getting rid of the consistent losers like all of South America is step one.  Unless there is a "good" Brexit, FoE is next on the chopping block.

Hence his "Jacque the Ripper" nickname. Selling the truck business was a huge mistake. Now Ford is having to spend billions to slowly get back into the game.

 

The huge problem with getting rid of Ford South America or Europe is that they provide volume for essential products.

The Cargo is made/sold in South America...it provides the volume the product needs.

The Ka sold over 150k units in South America last year...it provides the volume the product needs.

The Transit sold over 100k units in Europe last year...it provides the volume the product needs.

The Kuga sold over 150k units in Europe last year...it provides the volume the product needs.

And so on for the Fiesta, Focus, Transit Connect, etc, etc, etc.

 

Products need the volume of those markets in order to justify the investment in the product. By pulling out of those markets, the amount of investment that goes into those products and the return on the investment both go down. Or worse, the essential products get killed off. 

Share this post


Link to post
Share on other sites

The big issue for Ford is that besides Kuga, Transit and Ranger  none of those other products make money, so the whole business plan is underwater until they do something.

Share this post


Link to post
Share on other sites
9 hours ago, jpd80 said:

The big issue for Ford is that besides Kuga, Transit and Ranger  none of those other products make money, so the whole business plan is underwater until they do something.

Ford EU 2018 sales report - High-series models (including Titanium, Vignale, Active, ST-line, ST and RS) comprised more than 70 percent of Ford’s passenger car sales in its traditional European markets, reflecting an increase of 5.1 percentage points.

"None" of those 70% plus high series cars make money?

https://media.ford.com/content/dam/fordmedia/Europe/en/2019/01/FordEuropesales2018.pdf

Edited by MKII

Share this post


Link to post
Share on other sites
9 hours ago, jpd80 said:

The big issue for Ford is that besides Kuga, Transit and Ranger  none of those other products make money, so the whole business plan is underwater until they do something.

Well the vehicle lines would be even more unprofitable for Ford if they got rid of Europe.

The Focus is the most important product for Ford China. You lose Europe, Focus gets less investment...and we have already seen what a lack of investment in a product, like Focus, causes to the company.

Share this post


Link to post
Share on other sites
32 minutes ago, MKII said:

Ford EU 2018 sales report - High-series models (including Titanium, Vignale, Active, ST-line, ST and RS) comprised more than 70 percent of Ford’s passenger car sales in its traditional European markets, reflecting an increase of 5.1 percentage points.

"None" of those 70% plus high series cars make money?

https://media.ford.com/content/dam/fordmedia/Europe/en/2019/01/FordEuropesales2018.pdf

If  Ford can´t make money on that,  Ford must close its business.

Share this post


Link to post
Share on other sites
20 minutes ago, ausrutherford said:

Well the vehicle lines would be even more unprofitable for Ford if they got rid of Europe.

The Focus is the most important product for Ford China. You lose Europe, Focus gets less investment...and we have already seen what a lack of investment in a product, like Focus, causes to the company.

Focus sales declined to 66,000 in China last year, even a new Focus isn't going to reverse that trend away from it. This is why Ford is going to Architectures, to move away from Focus being so important to cover platform costs. In order for Fiesta dn Focus to survive, they need to move to Spain. I know it's a real gut punch to find out that the two top sellers in Europe are not really profitable....

Edited by jpd80

Share this post


Link to post
Share on other sites
1 hour ago, MKII said:

Ford EU 2018 sales report - High-series models (including Titanium, Vignale, Active, ST-line, ST and RS) comprised more than 70 percent of Ford’s passenger car sales in its traditional European markets, reflecting an increase of 5.1 percentage points.

"None" of those 70% plus high series cars make money?

https://media.ford.com/content/dam/fordmedia/Europe/en/2019/01/FordEuropesales2018.pdf

This is what I questioned in previous threads, the sales rhetoric doesn't match what the CFO said before Christmas (Only Kuga profitable)

High production costs in Germany for Fiesta and Focus is killing profitability.

Edited by jpd80

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×