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Ford Shares Drop on Plans for 2014 Investment in 2015 Growth

DETROIT(TheStreet) -- Ford (F - Get Report) shares were falling Wednesday after the automaker said 2014 pretax profit will decline from their levels this year, one of the best in the company's recent history, as Ford positions itself for future growth by introducing new products.

Shares were down $1.08, or 6.5%, to $15.62 on Wednesday.

During a conference call with analysts and media, Chief Financial Officer Bob Shanks said 2014 pretax profit will be between $7 billion and $8 billion, down from about $8.5 billion this year. He said the principal cause will be lower profit in North America due to the rollout of 16 new vehicles during the coming year. The introductions will put Ford in a strong position for 2015, he noted.

"We've had four very strong years of financial results," Shanks said. "We're going to have an increase in global market share this year that's quite meaningful. We do expect coming out of '14 that we will see improving results and improving volume."

Shanks said 2014 will mark the best or second best year for Ford in the past 10 years. But he noted: "Our business is not linear, I've said this over and over again." Spending on new products during the recession enabled Ford to continue growing, he said.

"We are committed to be a much bigger player in the business," he said. "Thats exactly what were doing now -- we're investing in the business everywhere. We have a lot of investments. They will effect, particularly in North America, volume."

In 2014, he said, product rollouts will mean reduced volume in some cases and the need for higher incentives on vehicle models that are being closed out. Also, Ford will confront production capacity limitations during the year.

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"We're projecting a growing industry next year (but) there are certain vehicle lines we probably will be building everything we can," Shanks said.

Shanks said the product introductions will come more heavily in the second half of the year. Capital expenditure in 2014 will be $7.5 billion, up substantially from 2013.

Globally, Ford said it expects 2014 losses in Europe to narrow, equal results in South America but with risk in Venezuela and Argentina, and similar pretax profit in Asia Pacific.

"Europe is very much about growth and about getting more out of the business top line than we have in the past," Shanks said. "We fully expect to be profitable in Europe in 2015," he said.

In Asia Pacific, Ford will pay a price for growth in 2014. "We have grown so much in Asia Pacific over the last several years; it's been quite strong," Shanks said. "As we move into next year we expect still to grow in Asia Pacific (but) you will see rising costs. You will see an improvement in the top line, you just won't see the same rate next year as you see this year."

A change for Ford in 2014 will be that it will begin to separately report Middle East and Africa results.

-- Written by Ted Reed in Charlotte, N.C.

To contact this writer, click here.

Follow @tedreednc



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