Joe Hinrichs Executive Vice President, Ford Motor Company - - PowerPoint PPT Presentation
APRIL L 25, , 2014 Bank of America Conference (PRELIM IMINARY INARY RESU SULTS) TS) April 1, 2015 Joe Hinrichs Executive Vice President, Ford Motor Company President, The Americas Bank of America Merrill Lynch -- 2015 New York Auto
Bank of America Conference April 1, 2015
APRIL L 25, , 2014 (PRELIM IMINARY INARY RESU SULTS) TS)
Bank of America Conference April 1, 2015
Executive Vice President, Ford Motor Company President, The Americas
Bank of America Merrill Lynch -- 2015 New York Auto Summit April 1, 2015
SLIDE 1
AGENDA
SLIDE 2
OUR FOCUS
+ =
THE PLAN
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Profits & Cash PROFITABLE GROWTH FOR ALL
SLIDE 3
ONE FORD LONG-TERM OBJECTIVES
People Working Together As A Lean, Global Enterprise For Automotive Leadership Five Objectives To Deliver An Exciting, Viable Ford Delivering Profitable Growth For All, As Well As Automotive Leadership Operating Margins 8%+ Top 5 Sales / 10%+ Global Share More Balanced Regional & Segment Profits Top Quartile Total Shareholder Return (TSR)
Highly Regarded By All Stakeholders
SLIDE 4
Strong Brands Serving All Markets Complete Family Of Best-In-Class Vehicles Profit = Revenue X Margin Product Excellence Innovation Ford Smart Mobility
Asia Pacific Americas Europe, Middle East & Africa Small Medium Large
“Turbo Machine”
PROFITABLE GROWTH FOR ALL PROFITABLE GROWTH FOR ALL
SLIDE 5
North America since 2008 – Continuing to implement global product strategy and launch new products that
– Delivering significant improvements in fuel economy – Driving quality improvements – Controlling structural costs – Aligning production capacity with demand – Generating strong cash flow to support corporate balance sheet improvements
Pre-Tax Results (Bils.)
NORTH AMERICA -- OVERVIEW
North America Transformation Has Driven Strong Profits In The Last Five Years
$(5.9) $(0.6) $5.4 $6.2 2008 2009 2010 2011 Operating Margin (Neg.) (Neg.) 8.4% 8.3% 10.6% 10.2% 8.4% $8.1 $8.8 2012 2013 $6.9 2014
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NORTH AMERICA -- KEY PRIORITIES
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U.S. INDUSTRY SALES RATES
14.8 15.9 16.8 16.8 17.0 - 17.5 Retail SAAR (Mils.) 11.7 12.9 13.7 13.4 2012 2013 2014 2015 Full Year Outlook
SAAR (Millions) U.S. Industry Sales Are Projected To Continue To Grow With A 2015 Full Year Outlook Of 17 - 17.5 Million Units
2015
SLIDE 8
U.S. INDUSTRY -- PICKUP SALES DRIVERS
Full-Size Pickup Sales Rebound Supported By Improved Housing Sector
2.3 1.6 1.4 1.7 1.9 2.0 1.8 0.9 0.6 0.8 0.9 1.0 2006 2008 2010 2012 2013 2014
Housing Starts and Full-Size Pickup Sales
Full-Size Pickup Sales (unit -- mils.) Housing Starts (unit -- mils.)
SLIDE 9
U.S. MARKET SHARE
Expect Higher Market Share In 2015 Driven By New Product Introductions Total Ford / Lincoln Share (Pct.)
15.2% 15.7% 14.7% 14.6%
B / (W) Prior Year (1.3) Pts. 0.5 Pts. (1.0) Pts. (0.5) Pts. 2012 2013 2014
2015
SLIDE 10
NORTH AMERICA QUALITY IMPROVEMENT ACTIONS
Accelerated Quality Actions Are Driving Improvement And Closing Gap To Best-In-Class Competition Ford U.S. Full Year Things-Gone-Wrong At Three Months In Service
2013MY 2014MY
Better Best
Class
Source: Global Quality Research System (GQRS)
16.4%
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Taurus Edge Fusion Transit Mustang Focus Super Duty Transit Connect Escape C-MAX Fiesta Flex Expedition Explorer F-150
Medium Duty
2015 launches 2014 launches
SLIDE 12
All-New F-150 Has Won 28 Major Truck Of The Year Awards, Including North American Truck Of The Year (NAIAS)
2015 FORD F-150
SLIDE 13
2015 FORD F-150 LAUNCH STATUS
The Launch Of The Most Capable F-150 Ever Is On Track
Key Data
Dearborn Truck Plant
Kansas City Assembly Plant
capability during Second Quarter
Key Data
SLIDE 14
2015 FORD F-150 SALES AND MARKETING UPDATE
Strong Demand For The All-New F-150
views from combined sources, including YouTube and Ford’s F-150 reveal website
actions taken by consumers, and additional 410,000 requests for more information
February
crew cab body style, and Lariat or even higher-spec vehicles
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2015 FORD EDGE
The All-New Ford Edge Began Shipping To Dealers In March
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2016 FORD EXPLORER
New Ford Explorer -- Americas Best-Selling SUV Over The Past 25 Years Available In Dealerships Later This Year
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All-New Ford Explorer -- Americas Best Selling SUV For 25 Years
INNOVATION THROUGH PERFORMANCE
More Than 12 New Ford Performance Vehicles Through 2020
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segment with about a third of the global industry profit pool
50% of global luxury sales by 2020
customers moving to luxury segment
regarded by consumers in China
footprint as we grow the brand
We Are Fully Committed To Re-Establishing Lincoln’s Position Among The Top Luxury Segment Brands
LINCOLN MOTOR COMPANY
Distinct Brand Unique And Compelling Products Superior Client Experience Strategic Priorities Opportunities Ahead
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Re-Establishing Lincoln As A Top Luxury Brand
LINCOLN JOURNEY
LINCOLN MOTOR COMPANY ANNOUNCEMENT BLACK LABEL REVEAL AT PEBBLE BEACH LINCOLN BRAND LAUNCHES IN CHINA MKC LAUNCH NAVIGATOR LAUNCH BLACK LABEL LAUNCHES IN LOS ANGELES LINCOLN ANNOUNCES REVEL PARTNERSHIP MKC CAMPAIGN WITH MATTHEW McCONAUGHEY LINCOLN DEALERSHIPS OPEN IN CHINA MKZ LAUNCH CONTINENTAL CONCEPT REVEAL AT NEW YORK AUTO SHOW
2012 2013 2014 2015
MKX REVEAL
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MKX
2015 launches 2014 launches
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All-New Lincoln MKX Is The Third All-New Vehicle In The Lincoln Transformation Plan -- Available In Dealerships Later This Year
2016 LINCOLN MKX
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LINCOLN CONTINENTAL CONCEPT
Elegant, Effortlessly Powerful, Serene, Lincoln Continental Concept Is The Future Of Quiet Luxury
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NORTH AMERICA -- KEY TAKEAWAYS
growing market share
the gap to best-in-class
impact of product launches
efficiency
Continue To Focus On Driving Profitability, Growing Market Share, And Improving Quality
SLIDE 24
SOUTH AMERICA -- OVERVIEW
pre-tax profit and operating margins through 2011. A more challenging macroeconomic and political environment started in 2012
– Weakening industry – Exchange weakness, high inflation, and capital controls – Change in regional trade policies
in 2014
in consolidated financials beginning in 2015
Results For 2014 Were Lower Than 2013, Reflecting Volatile Business Environment
* 2013 pre-tax results were $(33) million
Pre-Tax Results (Bils.)
$1.2 $0.8 $1.0 $0.9 2008 2009 2010 2011 Operating Margin 14.1% 9.7% 10.2% 7.8% 2.1% (0.3)% (13.2)% $0.2 $ - * 2012 2013 $(1.2) 2014
SLIDE 25
SOUTH AMERICA -- BUSINESS ENVIRONMENT
South America Faces Numerous Macroeconomic And Political Challenges
political challenges continue to escalate and include: – Recessionary to low-growth economies – Tough competition and excess capacity – High inflation – Capital controls and limited access to foreign reserves – Restrictive trade policies – Contested tax incentives – Political and social uncertainty in some countries
SLIDE 26
– Build on improvements in quality and fuel economy – Implement global Ford products, tailored to local market needs – Strengthen brand to support long-term growth – Grow revenue and market share, including trucks and expansion in smaller markets – Reduce costs through footprint optimization and increased
– Manage country and currency risks through trade and currency balancing
SOUTH AMERICA -- STRATEGY
Quality, Growth, Cost Focus, And Country / Currency Risk Management
SLIDE 27
Ranger
2014 Launches 2015 Launches
Fusion Focus Ka Cargo F-250 Explorer Edge Fiesta EcoSport
Transit F-150 Escape Mustang Heavy Duty
SLIDE 28
All-New Ka Has Leading Fuel Economy And Brings New Technology And Safety Features To The Emerging Consumer Class
2015 FORD KA
SLIDE 29
The New Focus Maintains Class-Leading Fuel Economy And High-End Safety And Technology Features As A Trade-Up Choice
2016 FORD FOCUS
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SOUTH AMERICA -- KEY TAKEAWAYS
South America Assessing Risks And Taking Steps To Address Challenges
legacy products with global One Ford offerings
material cost, accelerate incremental localization, and improve structural cost
which should result in lower volatility and profit risk going forward
will return to profitability
SLIDE 31
2015 KEY METRICS -- BUSINESS UNITS
Expect Total Company Pre-Tax Profit, Excluding Special Items, To Be $8.5 Billion To $9.5 Billion
2014 Full Year 2015 Full Year Results Outlook Automotive (Mils.) North America 6,898 $ Higher*
8.4 8 - 9% South America (1,162) Substantially Improved* Europe (1,062) Improved* Middle East & Africa (20) Loss Asia Pacific 589 Higher* Net Interest Expense (583) Equal To Or Higher* Ford Credit (Mils.) 1,854 $ Equal To Or Higher*
* Compared with 2014
%
SLIDE 32
Pre-Tax Profit Percent of Full Year
First Quarter Third Quarter Second Quarter Fourth Quarter
* Illustrative only, excludes special items ** Expect Full Year 2015 operating effective tax rate to be about equal to 2014 rate
Atypical Profit Calendarization Expected In 2015; Operating Effective Tax Rate Expected To Vary During The Year
2015 Plan Historical
Operating Effective Tax Rate**
Full Year Rate First Quarter Third Quarter Second Quarter Fourth Quarter
2015 Plan
SLIDE 33
2015 PLANNING ASSUMPTIONS AND KEY METRICS
Strong Growth And Financial Performance Expected For 2015; Total Company Pre-Tax Profit To Be $8.5 Billion To $9.5 Billion
2014 Full Year Results Plan Planning Assumptions (Mils.) Industry Volume*
16.8 17.0 - 17.5
14.6 14.8 - 15.3
24.0 24.5 - 26.5 Key Metrics Automotive (Compared with 2014):
135.8 $ Higher
3.9 Higher
3.6 $ Higher Ford Credit (Compared with 2014):
1.9 $ Equal To Or Higher Total Company:
6.3 $ $8.5 - $9.5
* Based, in part, on estimated vehicle registrations; includes medium and heavy trucks * * Automotive operating margin is defined as Automotive pre-tax results, excluding special items and Other Automotive, divided by Automotive revenue * * * E xcludes special items; see Appendix for detail and reconciliation to GAAP
2015 Full Year %
SLIDE 34
Asia Pacific Europe, Middle East & Africa Americas Large Medium Small Asia Pacific Americas Europe, Middle East & Africa Small Medium Large Asia Pacific Europe, Middle East & Africa Americas Large Medium Small SLIDE 35
SLIDE 36
Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation: Decline in industry sales volume, particularly in the United States or Europe, due to financial crisis, recession, geopolitical events, or other factors; Decline in Ford's market share or failure to achieve growth; Lower-than-anticipated market acceptance of Ford's new or existing products; Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States; An increase in or continued volatility of fuel prices, or reduced availability of fuel; Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors; Fluctuations in foreign currency exchange rates, commodity prices, and interest rates; Adverse effects resulting from economic, geopolitical, or other events; Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions; Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors); Single-source supply of components or materials; Labor or other constraints on Ford's ability to maintain competitive cost structure; Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition; Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns); Restriction on use of tax attributes from tax law "ownership change;“ The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs; Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and / or sales restrictions; Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise; A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-or- pay" contracts); Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments; Inherent limitations of internal controls impacting financial statements and safeguarding of assets; Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier; Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities; Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors; Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles; Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and New or increased credit, consumer, or data protection or other regulations resulting in higher costs and / or additional financing restrictions. We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
RISK FACTORS
SLIDE 38
2014 INCOME FROM CONTINUING OPERATIONS
APPENDIX 1
SLIDE 39
SPECIAL ITEMS
2013 2014 2013 2014 (Mils.) (Mils.) (Mils.) (Mils.) Personnel-Related Items Separation-related actions* (156) $ (251) $ (856) $ (685) $ Other Items Venezuela accounting change
(800) $
(800) $ Ford Sollers equity impairment
2016 Convertible Notes settlement
U.S. pension lump sum program (155)
(155) $ (926) $ (712) $ (1,255) $ Total special items (311) $ (1,177) $ (1,568) $ (1,940) $ Tax special items 2,080 $ 181 $ 2,157 $ 494 $ Memo: Special items impact on earnings per share** 0.43 $ (0.25) $ 0.14 $ (0.36) $
* Primarily related to separation costs for personnel at the Genk and U.K. facilities ** Includes related tax effect on special items and tax special items
Fourth Quarter Full Year
APPENDIX 2
SLIDE 40
AUTOMOTIVE SECTOR
APPENDIX 3
SLIDE 41
AUTOMOTIVE SECTOR
(Bils.) (Bils.) (Bils.) Cash and cash equivalents 5.0 $ 6.0 $ 4.6 $ Marketable securities 20.1 16.9 17.1 Total cash and marketable securities (GAAP) 25.1 $ 22.9 $ 21.7 $ Securities in transit* (0.3) (0.1)
24.8 $ 22.8 $ 21.7 $
* The purchase or sale of marketable securities for which the cash settlement was not made by period end and the related payable or
receivable remained on the balance sheet
2013 2014
APPENDIX 4
SLIDE 42
AUTOMOTIVE SECTOR
APPENDIX 5