Ford expects autonomy, mobility to take $300M bite out of 2017 earnings

DETROIT -- Ford expects its investment in mobility and autonomous vehicles to reduce its 2017 earnings by $300 million, providing a breakout of its investments in the future for the first time.

And next year, the automaker expects that figure will worsen, although officials are confident that decisions they’re making now will bear fruit in 2019 and beyond.

Despite that hit, Ford on Tuesday reported 2017 preliminary net income of $7.8 billion, up 70 percent due in large part to a much lower effective tax rate.

Ford shares fell 3 percent to $12.70 in after-hours trading. 

The automaker said it expects its pretax profit will be $8.4 billion, down 19 percent, or $1.9 billion, from 2016.

Ford said it will give shareholders a $500 million supplemental cash dividend -- in addition to a regular first-quarter dividend of 15 cents per share -- following expectations that it will finish 2017 with earnings per share of $1.95, an increase of 80 cents from a year ago.

The special dividend is more than double the one Ford paid a year ago. Since 2012, it has paid back $15.4 billion to shareholders via dividends and share repurchase, according to CFO Bob Shanks.

Ford released the figures as part of a presentation Tuesday evening at the Deutsche Bank Global Auto Industry Conference in Detroit. The automaker said the earnings would be in line with the company's most recent guidance. It expects to have ended the year with $26.5 billion in automotive cash and nearly $37 billion in liquidity.

For 2018, Ford said it expects an adjusted earnings per share in the range of $1.45 to $1.70, which would be a decline from about $1.78 last year.

Ford also provided more details about its newly increased investment in electrification. It said the $11 billion it plans to spend by 2022 includes $6.7 billion between 2015 and 2020 -- 49 percent more than the $4.5 billion it had originally planned for that period -- and $4.3 billion more in the subsequent two years.

Ford said the investment will lead to its introduction of 16 battery-electric vehicles and 24 hybrids or plug-in hybrids globally. Tuesday, it said North America will get 7 of the 16 battery-electrics. Europe will get three, and Asia Pacific will get 13, as some will launch in more than one region.

Including gasoline-powered vehicles, Ford said it will have 25 product launches in North America by 2019, with a 35 percent of its lineup getting updated. Ford has had fewer new vehicles in recent years as its product cycle settled into somewhat of a lull.

Europe will have 27 launches by 2019, while Asia Pacific will have 24.

CEO Jim Hackett said in October that Ford would shift $7 billion in product-development funding from cars to more profitable light trucks.

On Tuesday Ford said that, over the next couple of years, it expects utility-vehicle mix will increase 10 percentage points, while its car portfolio will shrink about 10 percentage points.

"We have a rock solid foundation and we have seen growth in key areas, but we know we must evolve to be even more competitive, and narrow our full line of nameplates in all markets, to a more focused lineup that delivers stronger, more profitable growth, with better returns," Jim Farley, Ford's president of global markets, said in a statement.

Farley said that means focusing on performance SUVs and “authentic off-roaders.” He said that’s a space Ford can get higher profits even in a crowded utility field.

He said Ford would scale back on car offerings in North America and Europe.

“We’ve made a lot of progress under One Ford, but it isn’t enough,” he said. “We’re pivoting away from a full line, all-market approach."

Shanks said the company is in a better position now under Hackett.

“I have a lot more confidence about our future today,” he said. “I have the clarity around the direction we’re heading as a business.”