Ford Moves to Streamline Operations and Bolster Profit Margin

DEARBORN, Mich. — Ford Motor is accelerating efforts to slash costs and plans to stop making the Focus and Fusion sedans for the North American market in a bid to turn around its fortunes both at home and abroad.

The automaker said Wednesday that it expected to reduce sales, marketing, engineering and other costs by $11.5 billion between 2019 and 2022. That’s on top of about $14 billion in efficiencies the company had already promised to achieve in the next several years.

The company is also considering exiting or selling money-losing operations in Europe and South America, its chief financial officer, Robert L. Shanks, told reporters. Ford expects the measures to enable it to achieve a global profit margin of 8 percent by 2020, two years earlier than it previously forecast, he said.

“We are undergoing a profound transformation,” Mr. Shanks said, “and are committed to taking decisive action.”

News of the turnaround plans arrived as Ford reported further signs of difficulty in the first quarter of 2018.

Net income totaled $1.7 billion, up by $100 million from the same period a year earlier, and earnings increased to 43 cents a share, up by 3 cents. But the company’s profit margin slipped to 5.2 percent from 6.4 percent a year earlier. Profits before taxes fell to $2.2 billion from $2.5 billion. And in every region of the world, Ford reported either a decline in profits or a loss.

In North America, Ford’s largest and most important region, pretax profit was $1.9 billion, down $200 million from a year earlier. Its margin in North America fell to 7.8 percent from 8.9 percent.

Mr. Shanks said North American operations had been hurt by rising costs for key commodities such as steel and aluminum.

Just two years ago, Ford was one of the most profitable companies in the global auto industry, thanks in part to robust sales of its aluminum-bodied F-Series pickup trucks. But since then, Ford has been slow to roll out the new sorts of sport-utility vehicles that have caught favor with American consumers, and it let costs creep higher.

Last May, Ford’s board named a new chief executive, Jim Hackett, to whip the company into shape. Mr. Hackett has laid out plans to introduce several new S.U.V.s as well as a range of electric vehicles, and has vowed to cut costs.

Ford took steps on Wednesday to bolster its operations in China, a key overseas market, where sales have been flagging. Rather than maintain two dealership networks selling separate lines of Ford vehicles, its China dealers will now sell all Ford products available in the country.

Content originally published on https://www.nytimes.com/2018/04/25/business/ford-earnings.html by NEAL E. BOUDETTE