Churn, downtime and broken momentum: Analysts on Ford earnings, outlook



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Ford Motor Co. reported higher-than-expected quarterly results on Tuesday as earnings in the company's core North American market fell less steeply than Wall Street expected, but declining vehicle prices in the region raised concerns about 2014. The automaker affirmed the 2014 profit outlook it presented to investors last month and described 2014 as a transition year that will test the strength of CEO Alan Mulally's team and the company's restructuring since he took over in 2006. A roundup of what analysts and others are saying about the company's earnings report and outlook:

"It sort of foreshadows what we will see in 2014. North America is going through a churn, and international operations are not going to be strong enough to offset that."

-- Guggenheim Securities analyst Matthew Stover, in describing Ford's first quarterly drop in North American vehicle pricing in five years as ominous.

"We see '14 profit pressure from extended truck production downtime for the transition to the new aluminum F-150 pickup truck and increased sales of smaller vehicles that have narrower margins. Ford will reap benefits from the truck transition and growth in Asia Pacific in 2015."

-- Efraim Levy, S&P Capital IQ analyst

"The reception of Ford's new F-150 large pickup truck, which is shedding 700 pounds of weight by moving to an aluminum body, has been impressive thus far. We give Ford credit for pushing the envelope with an innovative product that some would describe as potentially game-changing. However, with the new product comes a good amount of risk. There has already been a delay in the production schedule (the truck will go into production in 4Q'14 vs. in-going expectations of a summer launch), likely due to challenges in stamping, riveting, and welding of the aluminum. Moreover, Ford also faces risks with regard to potentially higher warranty expense and customer acceptance -- large pickup buyers may be resistant to change, and may be skeptical of the new truck's durability.

-- Brian A Johnson, Barclays Capital Inc. analyst

"Increased downtime for the F-150 launch could reduce North American pretax profit by $800 million this year."

-- Buckingham Research Group analyst Joseph Amaturo in a research note advising investors to sell Ford shares.

"They're going to be more vulnerable to opportunistic pricing from the Japanese automakers."

-- Leah Bennett, co-chief investment officer of South Texas Money Management in San Antonio.

"All one could ask out of 4Q results was to help increase confidence in the 2014 consensus following last month’s warning. This is important to help position Ford as a 2015 story."

-- Adam Jonas, a New York-based analyst at Morgan Stanley.

"Ford has been on a lengthy roll, and its high-volume vehicles remain strong in the market. For 2014 it is important that Ford executes a successful wind-down of the current F-150 and make a successful launch of its successor."

-- Jack Nerad, market analyst at Kelley Blue Book

"Investors ought to be cheered, too, by Ford's announcement that its pension plans are almost fully funded, which means less cash will be siphoned off for pensions in the coming years and more pumped back into future growth or distributed to shareholders through increased dividends."

-- Joann Muller of Forbes.com

"North American profitability held up better than many were planning for, despite a $300 million higher warranty expense during the quarter."

-- Christian Mayes, analyst at Edward Jones Equity Research, in USA Today

"Ford is the only Detroit auto maker that didn't see its shareholders wiped out entirely, due in no small measure to [Alan] Mulally's bold leadership. Heading into 2014, though, his momentum seems to have been broken. Don't blame the global car market. Analysts at Deutsche Bank see unit sales rising about 4% with China continuing its surge and even Europe reversing a multiyear slide. Instead, blame a brutally competitive industry."

-- Spencer Jakab of The Wall Street Journal

Reuters and Bloomberg contributed to this report

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