Ford sees global tariffs adding to an uncertain 2019
Ford has forecast weaker-than-expected fourth-quarter profit levels, saying that global tariffs could erode 2019 earnings by about $700m (€612m).
The number two US carmaker said it could see improvement in 2019 earnings and revenue even as global industry sales remained flat but did not provide any figures, disappointing Wall Street.
The company’s omission of a formal earnings range for 2019 may be interpreted negatively by investors, analysts said.
“Investor patience is likely to be further tested today as Ford has basically once again said ‘your guess’ to the financial community with respect to specific financial guidance,” this time being its 2019 outlook, Evercore ISI said.
The absence of details provided on its expected profit could point to the company having less visibility on the market and the challenges it faces, RBC Capital Markets analyst Joseph Spak said.
Last week, Ford’s larger US rival, General Motors, said it expected higher profits in 2019, offering an estimated range that was far stronger than Wall Street analysts had forecast.
Ford sees the potential for higher operating earnings, revenue and adjusted operating cash flow this year, chief financial officer Bob Shanks said at a Deutsche Bank conference held in conjunction with the 2019 North American International Auto Show in Detroit.
However, he said, the volatile US trade policy environment and uncertainty around Brexit could impact its performance in 2019.
“Until we see how some of these things begin to play out ... we want to be a little prudent in terms of how specific we are,” Mr Shanks said.
But do we think we should improve the business this year? Absolutely.”
Ford expects tariffs imposed by the US and China, as well as higher costs for steel and aluminium, to hurt profits by about $700m this year, Mr Shanks said.
Tariffs and high commodity costs also hurt its 2018 earnings.
Helping the company will be new product rollouts, including the Ford Ranger pickup truck and Explorer sport utility vehicle, its restructuring initiatives, a recovery in China, and the redesign of its money-losing European operations.
