Ford Motor Co. (F) - Get Report shares edged higher Thursday after unveiling plans to slash more than 12,000 jobs across its European operations by the end of next year as it ongoing restructuring plan aimed at returning the automaker to profit.
Ford said it will close plants in France and Wales, having reduced production at facilities in Spain and German and shuttered a plant in Russia, in order to reach the 12,000 jobs cut target, nearly a quarter of its workforce, although the company said many will come from voluntary separation agreements. Earlier this month, Ford said its 1.5-litre petrol engine plant in Bridgend, Wales, would shutdown in February of next year, a move that would likely mean the loss of around 1,500 jobs and cost the company $400 million in separation and termination payments. A further $250 million in non-cash charges, mostly linked to pension expenses.
"Ford will be a more targeted business in Europe, consistent with the company's global redesign, generating higher returns through our focus on customer needs and a lean structure," said Ford Europe president Stuart Rowley. "Implementing our new strategy quickly enables us to invest and grow our leading commercial vehicle business and provide customers with more electrified vehicles, SUVs, exciting performance derivatives and iconic imported models."
Ford shares were marked 1.2% higher following confirmation of the job cuts, which were first reported by the U.K.'s Financial Times, to change hands at $10.04 each, a move that would extend the stock's gain to around 31%.
Last month, Ford boss Jim Hackett said the automaker is entering the final phase of its plan to shed 7,000 salaried positions globally, about 10% of its workforce, as it looks to save $600 million a year.
"Ford is a family company and saying goodbye to colleagues is difficult and emotional," Hackett said in a company-wide email. "We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead giving people the choice to stay for a few days to wrap up and say goodbye."
Ford's first quarter earnings, however, surprised to the upside thanks to a to a surge in U.S. demand for its iconic pick-up trucks that offset weakening international sales.
Ford said earnings for the three months ending in March rose nearly 52% from the same period last year to a forecast-beating 44 cents a share. That's even as total revenues edged 3.9% lower to $40.34 billion as key markets in China continue to weaken.
U.S. sales, however, held steady at $25.4 billion, with healthy demand for trucks and SUVs in the company's home market providing $2.2 billion of its overall $2.4 billion in operating earnings for the quarter.