F - Earnings call transcript Q4 2018

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Operator

Good day. My name is Deidra, and I'll be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-answer-session [Operator Instructions]. would Antipas to Investor Tyson, I over the Relations. time, Lynn to Executive this now turn like call At Director of

Lynn Antipas Tyson

we Operations; Quarter President with Farley, will and Jim Marcy Mobility; Hackett CEO; Brian Bob performance Thank our brief Motor will of open Shanks, us questions. our and today quarter and everyone are about Welcome we Officer; Bob progress of our and Global are relative Jim China XXXX review in and for actions Farley Joe then Ford Markets. Financial the begin results After the Fourth framework. taking joining Jim are President a creation you, of to Jim Presenting of CFO Earnings Hinrichs, Jim's review more Klevorn, up comments, detail talk then of our to Hackett, improve Global President value in Chief call Europe. our Executive to Call. President Diedra. Schaff, will Company's will the Credit. Ford Also

a Jim closing will have few Q&A, Following remarks. Hackett

Our with most could differ discussions XX. results shareholder.ford.com. actual Slide may And looking those from U.S. can for included earnings measures some factors These cause results statements are the non-GAAP results include deck, Actual in stated. earnings of materials the along that comparable rest forward most future Today's appendix our of about be our GAAP at to to reconciled found performance. discussed which today are include expectations the on references. our the differ significant

and mix basis. and operating are comparisons an is all on Company cash adjusted noted, EPS on volume-weighted otherwise EBIT, unless addition, In a flow are product basis year-over-year.

the Jim call let over to Now, me Hackett. turn

Jim Hackett

to Thank all for us and you, thanks today. of joining Lynn, you

we a discussion and to as to XXXX If ahead of I XXXX, like couple X, our this recap look evening. make would to to points Slide you return start

year wasn't that poor headwinds the it some that and we parts action the in now as outside which the by designed be win. have that business, business the will frankly, we to challenging business XXXX control year we known Ford, hit know a and performance right were For Certainly, between taken our will address. and of of was some

of XXXX, it a laid and thrive where was we future. through business Importantly dynamic a that much can year we tell foundation to business. progress more for want the now A more resilient you in and the stronger,

enter I am as we So really XXXX. optimistic

clear a have vision. We

solid we in We plan have and are a mode. execution

business. action strengths We address to are underperforming to our decisive parts taking start of fortifying building and and on the

Some that in you U.S. sedans that with action our will know about, touch the restructuring April out Europe to for to in are taking profitable restore example, we last later China recently, and and growth. Jim where the Farley announced our on this we in along decision phase

and are product are to salaried customer We development efficiently. reorganizing market to our resizing bring retooling global workforce, more focused and unique we product more

capital our relationship leveraging since VW and alliances cost to are Mahindra. with sense efficiency and more where We makes as be it

on work mobility quickly. AVs advancing and Our is

to U.S. the cloud. in the vehicle Ford new every connecting are We

COX. technology And that system the new will traffic Through around known will vehicles accidents through reduces we soon congestion, them C-VXX. a transportation usher these the and this, in world help talk to improves as

Now, let's turn to cover here. Slide financial X. I our full will metrics

margin We in X%. EPS. For of in $X.XX delivered and X grew generated a revenue year, the billion we X.X% EBIT with

refresh and by cycle. market higher entered benefited seven auto by EBIT Now more net a than North product currency This as in offset major largest from commodity years. led benefit costs and headwinds in was we improvement America, the factors product

again China in of are and costs those. addressing the confirming specific also Europe, all challenges that We Ford warranty incurred higher and we

the year billion turn in to billion face billion to targets. we we in ended you and that, in ask is slide. liquidity, Slide all cash company this well our flow Importantly with I'd both of $X.X above $XX.X generated X, in and a the highlight $XX.X cash strategic

Now more and the can win that introducing marketplace. lineup fresher, in targeted this is compete and team a appealing focused every on in market,

average. next XX% example stronger For expanding the were services months, in by are commercial the Ranger competitor strategy. are widest U.S., franchise the we're prices recently XX segment XXXX, now In the streams margin transit revenue transaction X,XXX nearest vehicle and that, F-Series Europe, very lineup. And vehicle, In and that strong. ever. billion commercial we of New in global started margin. our $XX has our the customer been In we profitable XX% selling new bolstering U.S. franchise in over the In our outsold about our refreshing early pickup we at above interest the includes with that EBIT

in the how we've have to Explorer Now our opportunity SUVs area. the say, have And been experts quickly the but Aviator we Detroit brands superior week in Show last stronghold SUVs similar we and globally is bring that moving that Auto at given create series a brand we're to The another pleased capability, New Aviator against. in this we really strength Lincoln world-class revealed the is one the to in example. I it know competes are The is to and of see other market. to

and on products this the new in many China, and first as Jim China. area is We this also that well. of will the all launched Escort new Focus hit

our generation Hybrid, propulsion next In the capability the efficiency. of that introduced compromise first we advancing provide new our strategy, of advanced Explorer hybrids no blend of of terms and

on with demonstrate happy the F-XXX. that this I press started very how technology. fully new with self-driving review that work early In and fleets reviews in cities of goods zero emissions We to design, will businesses that version self and deliver And new driving propel I my-self partnerships new technology, confirm we and performance that if in an that generated. we models. with will with technology people business we of year ways to shifting was reveal have later so the say stunning a November, utility electric

first As we and mile we out mobility acquired solutions. note mile has build mobility company this last that our e-scooter delivered Spin, the business, and

Lastly, the bottom on time. get the in initiatives all XXXX. will continue our fitness this impacts line asked operating about I of leverage

Let increased structural we per in flat cost you and again expect by $X.X XXXX that tell cost we We've automotive structural me kept XXXX, our on cost this billion XXXX, in from be average. year to XXXX. through flat arrested trend year-over-year our

me understand more I to you there business, of share Before the the we to confirm announcements let say plans months our coming initiatives taking stakeholders. expect that place than specific though global our course that to redesign in us over I respectfully can related it and in constructively with to of a there. turn come that we having want to Bob, are coordinated what's are and important as work have is happening in way nothing more to actions. These

to turn me Shanks, Financial let Officer. Bob? over it Now, Bob Chief our

Bob Shanks

Thanks Jim and evening, good everyone.

through And the going keep Before focus on provide I'll to it details, context quarter I year. just the to like year. some on simple, the and full would the

Although, periods. my to comments both generally apply

for this probably specifically and products' active Ford, off and this pricing. mix no relatively folks In growing have me new market didn't product you action should year. plan in to more a that factors we from Ford factors. XXXX, we actions about a most alone. as say very quarter It's in delivered fair planned of segments. our significant volume growth given refresh industry higher market our First Jim delivered the said We net strong light strong reiterate expect and And the global note XX% fourth a year product year let in what that of

net increased announced of in America. the XXXX, headwinds commodity North about first most the the Secondly impact; tariff the effects; about recalls roughly $X.X $XXX tariff-related of incurred not areas. $X.X run Takata recover pricing of rate to taken last ongoing of are million to for million forth, $XXX partially this the million business; second unrelated year billion to These exchange some billion in third, the related of we four impacts of of were $XXX in indicative in part and the about effects; cost unfavorable

EBIT, Now and improvements to a us team in this the his we as Galhotra region million. elsewhere continue bit This billion $XXX impact business America. billion only North to $X than declined XX% strong by North the a Kumar aggressive to their that suggests they however, more $X.X return delivered America's margin. incurred in year-over-year work

and Company South to mention of inflationary us his improvement push America demonstrates Watters $XXX EBIT to team these were regions efforts the trends, EBIT, effects the that fundamental these $XX and they counted other $XXX of absorbed in year-over-year million about Asia-Pacific, the headwinds, not in automotive for specifically it decline fourth Europe. adverse million successfully in this and The million, China against quarter, yet not back redesign from Lyle that of full as the Again, delivered to XXXX. region. the the drove and the essentially two year the both business in approach

XXXX. business among we regions returns regions and Asia-Pacific generate about Ford executing $XXX future a that appropriate the addressing in strongest a models headwinds, was $X.X the that our In in fact. Europe, redesigns these million capital yet the of results $XXX results performance company decline in million deeper much absorbed of allocate yet headwind, in Europe refresh we billion million declined specific to year-over-year of and our These have all with fundamental delivered the underscore issues them. from may $XXX product to urgency on XXXX, in saw decline about of

I the continued Finally, didn't stable highlight full I'd the for and and remiss strong quarter Ford year be the results credit. from if both

a turn want X, let's that, summary three to with key to So things here. highlight of company There's Slide I our metrics.

all strong the exception lower quarter, decline higher other the except of Performance in the net were across metrics. all which regions a year-over-year from in revenue, with most China benefited North drove and in Europe pricing year of the in from First metrics China. and ago mix America key

impact adjusted in was EPS tax driven effective and by per and tax planning an of quarter tax includes U.S. reform. $X.XX X%, favorable company share negative rate Second, the adjusted the of this

of items adverse $XXX Two Finally, was major GAAP net $X.X income company this. negative special drove This billion. million. includes items

conditions incurred mark the and OPEB pretax was year. totaled we financial in that negative late This market to non-cash First, adjustment to for occurred that $XXX due plans and market a adverse pension million.

of personnel second with The $XXX million. separation charges

accounted to In $X.X and result for Now, EBIT company mainly incurred business. nearly by ago automotive turning credit EBIT. develop explained than planned, the a This adjusted more Ford mobility services of automotives a period, than to technology our as investments lower billion. result the X, lower driven we $XXX favorable million the autonomous by mobility, was year Slide and in loss

Next, looking at taxes.

North XX America quarter, best in were a eight U.S. ago, the year EBIT. increase of increased company of In tax a effects a outside were year low total before of ago. North Operations Slide the from North effect the EBT and credit shows favorable America tax and earnings a individually taxes. full total at and to drove The million, this outside largely loss which billion a X%. taxes that and automotives collectively billion This year repeat the delivered years. resulting absolute America. reform highlights increase tax $XXX in a China the combined Ford $X reflects and unfavorable Slide positive Ford Europe the compares of quarter, X $X.X up taxes While credit. loss, $X.X was in a non large billion the generated year ago. planning the of impact

metrics to Ford operate very remain automotives credit U.S. consumer and healthy. continues support effectively. well

ended we company As year. operating in year and flow shown cash the XX, full Slide quarter achieving on the the adjusted positive

was the our We above both $XX billion. about of with $X.X targets. more Cash liquidity billion also balance $XX than year net cash at debt a of billion, ended with

at end to and pension funded taking year plans global funded fully Our together be continue de-risk.

due OPEB re-measurement lower adjusted automotive the the by net moment, were South quarter results the full fully shows billion. full more a separation year quarter, essentially fourth ago, for fourth Bridging expected the while $X Compared fourth were results regional the like result, to EBIT Mobility corporate America driven losses. Ford and North year Unlike in year EBIT company accounted EBIT prior year the the Slide explains in income decline adjustment for GAAP due year was and to and North Europe. the the other quarter, than a was pension earlier. automotives for incurred to and to year as special EBIT. the as that automotive across EBIT. and outside XX automotives Compared than profitability personnel of Turning more quarter, items to the our we decline company America and explained our America. North in credit in that down Like North mentioned the of and well Europe. America headwinds losses on the the I full Slide China full and to XX focuses fourth of

shown in to will see part and in ROIC, led for XXXX. last before business Ford at initiatives we've and the factors Deutsche in the to perspective, they this to revenue, conversion assumptions This services operating China metrics, of still lower and Offsetting these we made where is unit turnaround America, based a as though our our well the Slide we taxes autonomous year-over-year as Drivers mobility business on company lead debt-to-EBITDA. at improvement. external reflects shared be effects products, XX, both in part key This From key for development, week higher on control performance as Turning would factors gain for fitness in outlook vehicle be and major costs. potential higher positive the cash conference. Detroit strong mobility, in XXXX, as the in expect traction and EBIT lower as for results were lower volume a we improvement EBIT XXXX margin our and including that Bank potential and least credit. lower effects Europe investments of margin, what specific the greater earnings China at we adjusted of new favorable North

performance to both to regions. his that Now, our in near-term Farley before is Europe Q&A, and going on taking provide going the in improve Jim? actions to China insights we're Jim

Jim Farley

you, Bob good Thank evening. and

Let's to Slide XX. turn

by this China Before into in taking didn't in and like I XX% we're our product from positive favorable dive North I America supported America line-up we're and largely and billion year, remiss carryover point This I year, like F-series. if pricing a Edge modest complete Navigator. finer our margin a Europe, was our And mentioned actions of on the would refresh and the in delivered Last market $X be the EBIT Expedition, year, factors as product new launches mix put opportunity target. new North line-up. North America beginning

Explorer, we're Ranger, truck have which three Explorer; end we new to later segment a mentioned, new the have and start which best Escape and aviator, name new hybrid be is rear off a Lincoln; wonderful a we line-up; all-time Jim plate America's industry; the Lincoln a we will is adding utility. for in which our have even have the great all-new in to at drive As largest new the product hybrid, Escape year we row another selling the we year, performance brand-new re-engineered and wheel of of SUV; all-new the U.S. in our have models

XXXX. we China China. could is of the the largest market it the twice be think So Obviously, automotive and U.S. world size the by let's in turn

a you, C stock, exacerbated grow shortfalls, not access So our plan brands including had We especially getting our these we deficits inadequate dealer cars. discussed to a as with business we maintained identified you the both our profitability. essential, of China. fresh back had on that of high-volume number And line-up. given we were by in Last fact year track operating is

with and of Well, fact, sell-down working urgently core tirelessly volume cars last an not the lacked Also, restoring leadership. our having engaged dealer each our we've our In growth issues of network. profitable volume and address bench in all a strong structural aligned to immediately. these year. local a is with been profitable costs of and were we were At to focus

reduced dealers our by example, Relative quarter, quarter-over-quarter. line-up. as launch this clear third this just and decks about we we the to our in includes are by and this Ford steadily distribution a prepare which the product as Escape more inventories XX% new is of profitable also, line-up, last all roughly trend fourth we to And product aged top These Lincoln well This the all-new to with expect and increase end our also year, our prices really now year in to inventories, are Simply material costs and sourcing last base, true we a positive For of of our the structural tackling network. for Chinese from consolidated quarter. Focus, encouraging the costs costs of critical. produced We're operations. we XX in adding increase targeting these are new for China local We're double transaction both than in cut China. reductions significant by results. products, supply aggressively will digit to of on

China me receives have Anning new as new marketing focus, positions, local CEO, proper as key management well leads Chen, and broken we both a to China separate and according ensure it Lastly, for we such as unit to talent business out and Ford Lincoln. the sales our and as

Europe. EBIT. our the Let's turn to target long-term of on X% deliver I've it said in past

the The higher vehicle much plan to We've light And We up and structures light redesigning capital attack pickup this, profitable most more a group commercial January vehicle three our importantly, on. core business with Earlier head are our reduce ST vehicle to improvements share and and commercial and business. centric passenger cost such standing with XXth, to achieve of new also general Fiesta our our year this our as key one on later in consecutive announced now of key We're product business cars, addressing of we're in consultation light is manager. this lead European begun year, improved lineup series mix, we this operations. units. Transit And leverage cost including lineup With in number formal with our process month, this partners and Focus while already last light Europe's vehicle Ranger drive the efficiencies. And commercial extend turning aggressively dedicated its targeted active fifth in van customer Europe, own our derivatives. will in union we plan including margin year and portfolio marked our our commercial Europe. as brand the focusing that we year. core growth

will and are like Now we to exit markets. higher-margin markets or unprofitable Germany, products our profitability, and relative we prioritizing improve

In addition, we're personnel and also targeting reduction cost. significant in structural

to about completed. You're the this hear year process specifics consultation going after more is

our around year investments structure utility our you the are believe products shared this to mix we steady that, like all for specific the units I've the Assuming with turn over a our actions. With just offset business in cost actions it I'd new flat Q&A. favorable for will fairly cost drive the across macroeconomic by with all globe to world, as operator

Operator

Your Instructions] comes of from question first Sachs. line David the [Operator with Tamberrino Goldman

David Tamberrino

for the you think were as XXXX Jim, we maybe of middle into and the and forward XXXX year how to a from a way communicated the planning redesign XXXX as action of year end of year fast a about If Ford? an XXXX, known be XXXX you as perspective. will to

Jim Hackett

out to Unquestionably, stern. from worth We on going of David. conference And XXXX, portfolio stem we the when time XXXX the first to investor worked addressed say it's we that beginning pointing to the I'm strategy. in product our this in the had

heard from we how we important way propulsion. Jim product updated car were when did in development. architectures just and that, You've thought that We about we constipated was. And the

in to time, issues taking got the big costs three all addressed we same boot. So shape cycle out to our at plan

been started time action same The in work so June AV in I we they've XX real was really really did pleased the They at second months. we Argo. in thing with with the is only -- XXXX,

that really there. being have work then surprising we call at talking that idea AV. tackle David the in planning, of asked lot just we time a thinking share And about for. the of business high, you've when talent very me put about and heard mobility. we to not started got we Back So of all vehicles and had Argo that can have that the connectivity, at structure looking the action competitors evolution of none given was independently building the that this people the we the And cloud I lots a of connected. looking are rated towards

to deal arrested just then October following lot a everyone management those the of want it's product then performed we a do you, America, and understand Kumar development on had ran the of year going underperforming? think So if I 'XX China market with people happy as of a showing about to work with frankly have things offset in to and couldn't. of are plan past if about what get When addressed. exemplary being are we happened through markets then and stuff this explain footfall look very very that with the lessons gathering Every smart And more some then are warranty moved the monetize make has had they call confirm the that they way there, me They some shape. you into a everybody that were to gone that. to think all one way issues, And and detail the but now in North we've with. them well. just caused that to are that that the some industry, for team Joe with I tour really the the at these hey, this All and not them helps from we headwinds can from changed. in lot also it I'm its that we that also

to going we we with dealing tonight be just that from class China. more that and and on can you got in So talk Jim what's heard world about

you all a just quick thinking all reading from for I tour list, of from doing from that my So things top we're the over I'm to those mind that phase said that. that's phase just not

David Tamberrino

are footprint and changes, this to year. footprint, start you be what what Ford And little the material side, there to expecting we or it's think around Will you're today Ford going of look like is my more question by a -- the restructuring if is bit about implying? end

Jim Hackett

Yes, so let's cover that.

this I but a hard bureaucratic, to the at team in year. involve a attempt, work version going So new April leadership October. very many on by the that well less attempt, and collar it's said architecting explain levels last Deutsche believe an that we white have modern I will to think work, Bank, that us doesn't of Ford started We layers, oriented. behind We have as more of this is

The later five is taken benefits longer would've to year. seeing us it start little this redesign So Europe we going months. and are a to

industrial anyone to And and world, either who know the of are be cite going average confidence follow there companies' in in think this our wins. is on because parts social paybacks You those the strong some five years four team. quick I plans but of to management I can just

and We back come that’s given that be room are of, that did you about It's lack as plan done very starting and have constituencies in turning Russian these us. of the There expect again, to coming and together. managing planning that. we it you be to I'm at to our to out a had about wait Jim South very long more not markets with more don’t excited board forward of different well. alliance And is lot that Farley behind a just under the we led review this come then it done will going will you'll sat will the all it's you so clean, interests. with forecast looking or review. will was year want I on When that is news the know on have David, that The But there. a consideration very, America. all

Bob Shanks

I we we at trying another help billion end $X about EBIT a because between there out $XX get is of and about effects get largely bit what way cash talked that to the get they're by about lag little will that end charge you And is of of the XXXX. cash you're thinking recognition nearly the think effectively 'XX, the often billion charges the time of the almost you spent the there a when David, think the door. that we going time done of to to of by is the as our

from the that we you that the from with plans what read can you in shared we've year. accelerated earlier So

David Tamberrino

I you my and the that start think negative think with related launch seriously the through that down if step And second Bob. China. the that is level for that's going guess to for for us the for you headwinds sell turn Can quarter out agree took color, out XQ products if I another that, how pretty really pipeline additional forward you would go which 'XX? wholesales question as and sequential that's thanks in income, JV walk business. and new about we XQ to probably around cadence dealer improvement to should and the I

Jim Hackett

to that on Bob tag team Bob. and to going I’m Jim ask

Bob Shanks

as had industry fourth and and really pricing we was particular largely, -- As it it though the in that. in can with but negative enough volume, a years, quarter we been all the us off very, to very net offset cost some also delivered what that’s of actually as sharply. The fell the see was I we number improvements add saw simple for Jim maybe but a also volume call volume. quite feature China on team pretty And in straightforward nearly not to

Jim Farley

improvement for year certainly we sight have a you year this line This coming models years, we see this those narrowing profitable flavor, as of sight of we localize more products. XX and next in our to have key we several and year a give for line China. great new business losses year very So sellable and than

three coming the have as three second a half network I in Explore, terms new in products of years. those and engagement and those mentioned grow Lincoln's of in and dealer is localization, to of key, you stabilized profitability lot year. Our starting we the now mentioned are really

teams the in two as Again, years. So our serious as on very next well. material on cost, localizations the really as costs drive structural profitability already have started well effort

to year of second half that and hold expect take We next in year. this

David Tamberrino

legacy from costs Ford exiting fully that of particular type any employment any impede region? outside would of Are there contracts

Jim Hackett

I only look that not at one, cost would to but consideration, that there about. like the we be in lot would David, variables and thing riddle of thought that is it's legacy the a

Operator

Bank with Murphy of John from Lynch. comes question America next your And Merrill

John Murphy

the and to one price. I it's thing a more industry mix has highlighted. I positive been been being you the on on as in and disciplined North just first in mean particularly want think America better, bit focus big I

curious Just there? was was as the the when through pricing North in quarter? XXXX such that even America and key strong going there basis, mix your there, relative specifically what you other products we what driver look on stuff things big significant fourth aged Is in on at a just or [indiscernible] gave the driver

Jim Hackett

I am going to ask Jim to that. address

Jim Farley

still carryover new. it's vehicle, So F-Series but relatively speaking, relatively is the

different team. because through One of impact lot as big well by those laser management. institutionalizing. mix lot now I is would controllable lot was focused different in And yield mix, the new an being would positive the America was of is really say super say worked vehicle of But And a is the it important on line controllables these We've that positive. go-to-market the the for allocations, really got team of on are of series a truck, that in it duty relatively drivers and still product a are strategies. news I was rooms North was really we and still

John Murphy

of flow the the in second funding then greatest not off was balance it largely a year. looking cash at this And I we question, look the dividends, sheet. on the mean year, Just at cash it as the was the

it's I try that the the mean then entity to dividend you and in restructuring think workout sheet shape. on now, the flow cash your balance in the get balance looks don't where really sheet. the agencies stand your to sheet cash from around right the from off and fund there plan like is great balance I pay rating you some that if concern

there concerned is getting seems like but really bit little to significant seem rating about doesn’t agency the So risk, this. be

you how of flow for curious restructuring get rating the can and cash sheet so in can flow opposed solve to fast you cash agencies? the Just cash fund the balance really as operating out turns riddle the of dividend

Jim Farley

and of it's is behalf And because part, team has attention, we've noted on this we've liquidity are levels won't interpretation the of been at as to Yes, stronger we operating their what horizon getting deliberately the is in pretend and a performance, that lower balance rating targets operating agencies, you strong, John to that operating and I planning our of for that’s end deliver of on saw to is the sheet the include are we do But that. that flow. lot as cash the running of obviously. concerns generation my at really The got and performance. stronger we very cash but above a period cash speak performance so day,

deliver Deutsche this plan on it's today, see it's opportunity again, we stronger generation. not both mentioned, to interesting and we've As year that Bank our an binary. cash us the for at and include certainly so -- But

and the [ph] day, mentioned didn't pay question, it's mean, of we it's above a the or I that degree cash. beyond got ability not do flow someone business ahead that we cash a we're to able really look to it's to other in to I generate cash As delivered 'XX. positive the think to dividend that is we billion if the $XX that we of level and as we what going be

Jim Hackett

better, you risk we improve to and doing David when Bob, simple And to question saying on Tamberrino intended to to were our system build linked fund the is and is performance David some do that. going confidence. this, those got but Bob do the been because we lot got the the team about we a all want started that we're might things this is get I of because with have becoming. can stuff product your here, new new to that's observed that's happy But development system. to to you higher question that new The approach totally John's the question to why of costs. through the of operating all has in points with in product And are the that it

now front these intersection that us the giving now. work to a all and in it's happening of win hard us So with all of chance things coordinated

of operating improving performance, I and things give we're mix probably because of why that's bringing the So higher to the of here. bear would us that kinds

John Murphy

I in going on been what's this some and going China. and industry lot mean in look at the job, EVs on there AVs and in you either you’ve and there the is on As and frustration this been a plan, has of

go a the barrel forward, XX%. on in gain product North And you at need XX% the ultimately big the pretty of As America notwithstanding Ford and we the tough leased just just went some going is through for to cadence look where period of and that rest you cadence is China at and stuff it. coming is the really North Star it product

I really complicated that it very I stuff. really though? is mean So But that's -- simple mean is it

Jim Hackett

right some I way. writing. delays just to feel the deferral now cause have I to that we be hindsight I When that of that hindsight, some I are the have the of studied back get that I in with traded look look towards wouldn't product happens like

So I'm to start faced say in I go not look going have going I I'm to with of to product. the mirror truth, as and be forward, moments

that confirm and also South you what of competing addressed. do do with competing we've challenges How challenges have I But the So in get, us the how to the of in car to we design are a don’t all think organizations way markets. complex the the the challenges America that profitability they those China They And about F-Series mislead some I have might said. have architectures. can competing of Europe, can issues of want about in get, business underlying potential. of in in big

a that model of product design say would So I what it's combination addressed. and we've the

Operator

your And Rod Research. comes Lache question with from Wolfe next

Rod Lache

was performance warranty item, closer right? item million housekeeping that a that just that underlying the I in excluding quarter presume that North was First, to Is XX%. Takata $XXX the the American and

Jim Farley

it couple quarter, some I there through year. year. that million referred a was of the was associated there $XXX that other spread but fourth in chunk to it was were the recalls, a full was There that for big with the actually The were costs

full maybe revenues a those of in alone X/XX a numbers Xs. up the North you case So think year the have about were year. that would Rod margin America But gave that in of you mid full just that I if numbers. All it's true the been all was full-year point of

Rod Lache

you though on quarter had Yes, number big in it basis… year-over-year but fourth a looks like a

Jim Farley

a And chunk Takata. of just that was

Rod Lache

a an be your presumably margin X% beyond XXXX. level, about $XX billion you're at that'd EBIT. On talking just higher at today some And revenue of point base

get $XX to by a doing improve of or you're the from thinking been takes You by these and hoping little this a about have to in so kind of working Obviously, in it people billion on on should Finco, $X are billion that the the cadence here to improvement. together, on. long But maybe billion that bit you to there can $X how trucks more But frustrated I billion. how savings of was things out $X some get flush makes you sense. bit be need we

from start that materially those the does a longer? it first thing exits certain that from there and through Can much little other are product, seems the so come in to like we those cost or savings as more and plays you in markets. comes that the savings. look then like year that that how So the And take it elements, sounds about products needle Ranger bit could XXXX, big Do to maybe talk because out is some really out? not move now, XXXX, like a out

Jim Hackett

five to arrested start that The is second build improvements about the I long accelerating, I development and up making and have inference are that because no see you that. and you what have you've the that didn't coupled white-collar Europe with about product turned a for want do talk to to the restructured. to get to and that’s structural heard help down in the the architecture structural kept big way shape Bob, actually it to just The to described And year. feel the takes to area, we the Bob, system. addition respect doubt me this tee we we this And once done you car it make know and we going Yes, years question us take costs for things model it to that are is want improvement. you that is take the there's frustration are I and that that you. not talking so are have big not fall counting apart way, the it talk do get that what why And long I we see I doing it disruptions to felt that. is to in that more industrial through that we is it as I have to right mentioned. on. an But to we I But about

Jim Farley

pricing, that I stuff, strong on, about in clearly, business you if performance line, going all mix, we XXXX, top part very to mean got think have the of building product the that’s a going so lot including be in XXXX on the Yes, actually. on

net that talking always XXXX. something you in with level So us the we that about case to would fitness should when progress a But the we be product the certainly continues as that case is would that said be from go continued assumptions we first That to year cost portion and go our material gain will related products. in traction initiatives. a then 'XX. that is we believe improvement in in that investment to grow that as good started included have expect see We or was of we little in new do some of Coming realize degree as of that the with will into bit in new cost because that that start to 'XX it model. forward,

forward we other a been There business actions because Europe. There'll XXXX, be that see comes that So that against your step there should is something as think forward. more in But of we be the have we XXXX. out put have on. will gone we accelerating be been will certainly come aside us. I will that go overall premise parts you Yes, taking come we things as external about a in of will through featured big could that

get that expect of then it to the Going redesign moving of our in bear back comment in some loss fruit. the of the had into that restructuring importantly, earlier to key all aggressively we’re affecting regions, back And that a very I around made should to XXXX and very very we in improvement China, because profit. reduce large the XXXX acceleration we

of attractive in terms really is And localization Lincoln what the that now you cases. forget products for that when going China very of to at key from substantial imports each pretty imports the of look losses some those into amazing mostly don't So -- the really, which quite will effect help. business Explorer and are the of

as your we the in number Rod, So of move initiatives, China, fitness gaining different forward. the we redesign, to things all case restructuring, of that gain like starts overall traction, momentum that it's have fixing business things, localization, whether premise of

Jim Hackett

And want to let capital. don't me sneak simple we a in that rates our spend beyond and depreciation like something today metric,

future. capital the through but wash already were business in so designing in systems to that the that it drops got the we appetite things we're some So

Operator

JP question And from your next comes Ryan Brinkman Morgan. with

Ryan Brinkman

number Do in I then thought you following think your such are Firstly, this following competitors, what would to have like both that autonomous curious of rollouts lots you look think to and demonstration et I’m it in or in vehicle key you terms two, cetera. Jim as three your to during area you sounds you have autonomous as capabilities, targeted number commercial relation in where are in your XXXX number a and quarter. Miami investors Detroit Cruise. you in your might some options. one, partner the ask relative Waymo of on autonomous, And in week last to for open are comment interesting.

Jim Hackett

very how graded. in in the of been our Argo my interest proud comments mentioned I investors of that has because I’m

So strong it's a enterprise.

worked You sense, of and -- we Marcy, remark here, from else what that know three. to we’re do we hard told Marcy somebody's tonight. BW started having was with nothing phone last to that’s have down we to But question not an add all that partners signed one to discussions make has equals saw that report effort. MOU how that you plus you want And at this get coming would we one when discussions to I it this Miami. really week what

Marcy Klevorn

answer all first feeling part of So to first how we’re question about overall. of the your

I along at Our are maybe same, to all And XXXX. it's we we said purpose on built the have a somewhat has confidence remains our is not problem and along vehicle XXXX. referenced tech very And also Miami level changed a have think scale the a building side. track building with which message by in difficult uniquely business we'll we are the important. we the experience, and demonstrated by we business. side be how the Jim and as It's uniquely And are technology building very riding

Dominos kind want in when those. August, believe we and do will Walmart and the them at and X-ish the figured November how we already industry many one of know see I become you are So monetize be vehicles probably the standing as available of be X, maybe as in far out establish to comment, partnering Jim's winners well and that Postmates, announced end confident to we of on us key building there that others. with will already we we have as we partnerships And with whom partnership as

businesses, that be help dominance would continuing still a partners pick partner. in will for build that learn look and building would we something that selecting et We build to how cetera to scale

Operator

question Jonas last Adam the Morgan your And with from comes Stanley.

Adam Jonas

or investment dividend sheet back maintaining to balance grade the is in the that priority, sustaining grade? current priorities and to higher First investment you Detroit. go the What communicated

James Farley

and plans maintaining I global stay investment very our overall Adam, in think starts at grade are debt our has of terms Deutsche capacity de-risked. balance that rating, I pension was Bank clear our with strong sheet ensuing financial and strategy funded and funded

the to the to to to business, And generate it question fund you I So includes else that to goes enabled includes has back us asked, Dave obviously traditional background the Everything got everything earlier is that else. opportunities, distributions. do that -- business new have that’s shareholder meet cash which and the then the think then to what is flow zero. business the

we've again concern around opposite, we've some fact around rating we business we're business made in chatting agencies that my that So interpretation concerned and discussions that that and dilemma per really of At plans and the around how I it's performance of that strength certainly balance have you about about been It's balance the made that is comments is the that's have lot with are foundation operating within business. the that's think they the facing it's I same the a had looking in we're in se not think the at that. on, place The trend and least the of sheet the this sheet. to performance. them address from of the the the running

the flow. we the So based Detroit again level expect repeating year cash our said of be, generate year what a what would to of expect we stronger view on to I in --

needs, be fund dividend we We have prove that. to including able all of to regular expect our but business the to

numbers going we’re Just have going having to to have already more help -- most isn’t to cash targeting. we

We cash on generation. level, businesses demonstrate including have performance operating turning to

Jim Hackett

risk that share in cost In yet likely pass gives about the will I see when Adam, with of in AV a we structures. can none aren’t have there. highly met to that those you we tried with to that thinking of I deal as when cash thinking of there. we've of with, you because what have of some that out those issues areas we just things our are and improve you are when share this conversation course the opportunity want have alliance MOU planning this but me hedging buffet how in that new to product and we cost want flowed and security you out really first can they the think add, And some question. through yet, you you hedge might loud all facing these to loud were to me are us it because had

Operator

to Hackett remarks. call Q&A. Jim concludes like the to That for closing I'd turn the back over

Jim Hackett

I I feel noise his that. apologize for And to know like don't questions, all is. what the we ask Adam get didn’t

I'd investing not the the our about comments think It redesign you the better was in future. year progress the foundation was in our again, so of satisfy But to that, of all a tolerance terms of global out. competitive for laying that can business. customers got while your sharpening 'XX So of our coming I of most say we like from I for just good it's thank here. feel

that. aren't We mortgaging

building Ford and with a profitability my very we're entered and returns. We're to momentum second now point, entered, clear execution this XXXX vision improve Ford in is mode.

Third, we're all the specific some that can we expect this did these business much with of about allocating share parts past to opportunities you coming areas more return taking the decisive what the capital underperforming know sedan of actions issues we're and year. initiatives months, In to restructuring. higher you in we're in as us

a Ford we're today for this all We I the to Finally, investors. create in invest our the that this rewarding earlier healthy more invest mind our to to allow And for future vibrant time than doing the work benefit good of us is to will is a said ford. even think in be as going stakeholders.

transportation have and better new vehicles Our addressable world. better that. all opportunity that most we trusted vision improve of doing tonight. world's will because an This designing is world so, company, smart smart exciting to participate. become helps you is the us for and a And market the huge to It create lives. for joining thing a Thank

Operator

fourth Motor Thank call. your This quarter concludes participation. the earnings conference for Ford Company you

You may now disconnect.

Lynn Antipas Tyson	Executive Director of Investor Relations
Jim Hackett	President and CEO
Bob Shanks	Chief Financial Officer
Jim Farley	President of Global Markets
Marcy Klevorn	President of Mobility
Joe Hinrichs	Executive President of Global Operations
Brian Schaff	CFO of Ford Credit
David Tamberrino	Goldman Sachs
John Murphy	Bank of America Merrill Lynch
Rod Lache	Deutsche Bank
Ryan Brinkman	JP Morgan
Adam Jonas	Morgan Stanley

Ford Motor (F) 23 Jan 192018 Q4 Earnings call transcript