Ford deepens cost cuts even as earnings rise
NEW YORK: Ford will deepen planned cost cuts and phase out several small models in North America even as it reported better-than-expected quarterly earnings, the company announced. It is another sign of a broader trend in the US market away from small vehicles.
The number-two US automaker after General Motors, Ford now plans $25.5 billion in cost and efficiency cuts across the company through 2022, a significant increase from the $14 billion in cuts previously announced.
Ford also will trim its capital spending plans over the 2019 to 2022 period to $29 billion from $34 billion.
Chief executive Jim Hackett, under pressure from Wall Street to turn the company’s fortunes around, said the cuts would enable it to realize important profit targets in 2020, two years ahead of the prior plan.
“We are committed to taking the appropriate actions to drive profitable growth and maximize the returns of our business over the long term,” Hackett said.
“Where we can raise the returns of underperforming parts of our business by making them more fit, we will. If appropriate returns are not on the horizon, we will shift that capital to where we can play and win.”
The plan came as Ford reported first-quarter net income of $1.7 billion, up 9.0 per cent and boosted in part by lower tax costs that offset the impact of higher costs for aluminum and other materials. Revenues climbed 7.2 per cent to $42.0 billion.
The automaker pointed to strong sales of larger vehicles, including the F-150 pick-up truck, the best-selling auto in the United States.