Ford CEO starts turn­around with up­beat fore­cast

Re­sults show the un­der­ly­ing health of com­pany: Hack­ett

The Hamilton Spectator - - BUSINESS - KEITH NAUGHTON

Ford’s new chief ex­ec­u­tive of­fi­cer sur­prised Wall Street with bet­ter than ex­pected earn­ings de­spite fa­mil­iar chal­lenges of a slow U.S. auto mar­ket and an ag­ing model lineup.

In its first re­sults since Jim Hack­ett be­came CEO in May, Ford de­liv­ered sec­ond quar­ter ad­justed earn­ings per share of 56 cents, beat­ing an­a­lyst es­ti­mates. While the car­maker boosted its an­nual profit fore­cast, it’s due to a low­erthan-ex­pected tax rate.

“The quar­ter shows the un­der­ly­ing health of our com­pany,” Hack­ett said in a state­ment Wed­nes­day. “But we have op­por­tu­nity to de­liver even more.”

Hack­ett took over Ford’s top job af­ter the board ousted his pre­de­ces­sor Mark Fields for not act­ing de­ci­sively to re­verse a three-year stock slide. Cred­ited with re­viv­ing of­fice-fur­ni­ture maker Steel­case, Hack­ett has a man­date to both clar­ify and ac­cel­er­ate Ford’s strat­egy to take on Sil­i­con Val­ley in the race to driver­less cars. In the mean­time, the au­tomaker is cut­ting costs as a dry spell in new model in­tro­duc­tions co­in­cides with the U.S. auto mar­ket de­clin­ing for the first time in eight years.

“It’s still go­ing to take a while to see any­thing in the re­sults” from Hack­ett’s ef­forts, said David Whis­ton, an auto an­a­lyst with Morn­ingstar in Chicago. “Re­gard­less of who is CEO, they just don’t have a lot of new ve­hi­cles right now. You don’t change that in one or two quar­ters.”

Ford fore­cast full-year profit in the range of $1.65 to $1.85 per share, ad­justed for some items. That’s up from about $1.58 per share pro­jected pre­vi­ously, chief fi­nan­cial of­fi­cer Bob Shanks told re­porters at the com­pany’s head­quar­ters in Dear­born, Mich.

The im­proved out­look comes from an ex­pected tax rate of 15 per cent this year, half of what the com­pany pre­vi­ously an­tic­i­pated. Ford low­ered its rate by uti­liz­ing tax cred­its it had ac­cu­mu­lated in over­seas mar­kets where it had suf­fered losses, Shanks said. Next year, Ford’s tax rate is likely to re­turn to 30 per cent, he said.

JOE RAEDLE, GETTY IM­AGES

A lower-than-ex­pected tax rate helped Ford’s sec­ond quar­ter re­sults.

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