The company reported 4Q 2017 revenue of $41.3 billion, up $2.6 billion year over year. For fiscal year 2017 as a whole, Ford posted revenue of $156.8 billion, up $5 billion from 2016.
The overall theme of the call, however, was that the fourth quarter — and 2017 as a whole — was challenging, but that the future is bright.
“2017 overall was challenging, including the fourth quarter,” Chief Financial Officer Bob Shanks said. “It also, however, was a year of progress.”
Adjusted pre-tax profit for 4Q was $1.7 billion, down $0.4 billion, mostly attributable to higher commodity costs and adverse exchange, Shanks said.
President and CEO Jim Hackett said the company is working to improve its fitness by “resetting revenue and attacking costs” in the short term and also “redesigning our business to compete and win in the future.”
However, preparing for the future involves much more than mere cost-cutting, he added. Among other initiatives, Hackett highlighted expanded investment in the company’s plant in Flat Rock, Michigan, in addition to acceleration of its electrical vehicle plans with an $11 billion investment.
Looking to 2018, Shanks said they expect company revenue to be “up to flat,” supported by 23 global product launches this year compared to 11 launched in 2017.
Shanks mentioned commodities price increases’ impact on the company’s bottom line. He added that as of the end of January, a little over one-third of Ford’s commodities exposures for 2018 will be “locked in through fixed contracts, hedges or purchases made.”
Commodity prices have picked back up to levels seen a few years ago, he pointed out, with about two-thirds of the effects on Ford coming in the form of steel and aluminum.
However, Shanks said despite’s Ford turning to aluminum — which is lighter and offers better fuel economy but is more expensive than steel — for some newer models, like its F-150 truck, the metal accounts for less than 25% of Ford’s impact. (According to MetalMiner IndX data, the LME primary cash aluminum price has jumped 22% year over year, up to $2,237/metric ton as of Jan. 29.)
“Really, steel is the story and other metals,” Shanks said during the question-and-answer portion of the call. “Aluminum as well, but maybe not as much as what you had expected.”
This year will prove to be one of change and adaptation for the company.
“We’re looking forward to 2018,” Shanks said. “This is an important year in our journey to redefine and reshape Ford through our fitness initiatives and the strategic decisions we continue to make to become the world’s most trusted mobility company.”