Last year saw a huge rebound for the car industry, with more Americans buying cars than in any year since the financial crisis. That sales momentum has led to some solid financial numbers for Ford (F), despite a high number of product launches.
The automaker did better than Wall Street analysts expected, despite reporting net income that was down from a year ago. Excluding special items, fourth-quarter earnings were 26 cents per share, which beat expectations of 23 cents per share. Net income was $52 million, or 1 cent per share, a fall from $3.07 billion a year earlier, when results were boosted by a one-time $2.1 billion special tax item. For the full year, Ford posted earnings of $.80 per share, down from $1.77. CFO Bob Shanks told Fortune he was pleased with the results as Ford “met our guidance” and delivered a strong performance in North America despite some being a year heavy in product launches.
Ford said it would keep relying on North America for its profit this year, and the No. 2 U.S. automaker signaled that losses in Europe would be more than previously forecast. The automaker had previously estimated losses from Europe at about $250 million in 2015. On Thursday, however, it backed away from that forecast, saying the loss would narrow from $1 billion in 2014 but would be wider than previously thought.
“We’re seeing a much bigger impact from Russia,” Chief Financial Officer Bob Shanks said.
Here are some more key points from the earnings report.
What you need to know: Ford is expecting a big year in 2015. It hopes to bring in pretax profit of between $8.5 billion and $9.5 billion. That would represent a huge leap over this year, when pretax profit was $6.3 billion. Some of the responsibility for that growth is likely to fall to the newly relaunched F-150. The pickup truck is one of the most popular vehicles in North America, and the new model should drive up results in the region.
The big number: The pretax profit for North America was $6.9 billion, down from $8.8 billion in 2013. One of the reasons this number was down? Warranties. “It was not a good year for us in terms of warranty costs, particularly recalls,” Shanks said. Indeed, it was a bad year across the U.S. automotive industry for recalls, and while Ford may not have had it as bad as Detroit rival General Motors (GM), it too saw a lot of safety recalls issued.
What you may have missed: One business that did great for Ford in 2014 was financial services. Ford Motor Credit, the financing company operated by Ford, saw its best results since 2011, bringing in $1.9 billion in pretax profit. This was driven a lot by the simple fact that people are buying more cars, giving the company more chances to give out loans.
—Reuters contributed to this report.
