DETROIT — Ford Motor Co. lost almost $1.7 billion in the fourth quarter after taking a big accounting hit from employee pension liabilities and retirement benefits, but the automaker eked out a modest profit for the year.
Ford on Tuesday said its fourth-quarter earnings before interest and taxes in the quarter plummeted 67 percent to $485 million, while automotive EBIT dropped 81 percent to $215 million. Ford’s North American earnings fell 64 percent to $700 million, mostly due to UAW contract costs, warranty expenses and problems with the launch of the redesigned Explorer and Aviator crossovers.
Ford shares tumbled more than 9 percent to $8.29 in after-hours trading after it announced results.
Ford last month warned that its fourth-quarter results would include a $2.2 billion charge related to its pension plans. The company has now reported two consecutive fourth quarter losses, after losing $116 million in the final period of 2018.
Revenue in the fourth quarter fell 5 percent to $39.7 billion.
For the full year, Ford posted net income of $47 million, down from $3.7 billion in 2018. Ford Credit posted full-year earnings before taxes of $3 billion, its best results in nine years.
“2019 financially was not OK,” CFO Tim Stone said. “From a strategic perspective, I think we had strong progress executing our strategic vision. As I look to 2020 and beyond, I’m very optimistic.”
For 2020, Ford said it expects adjusted free cash flow of $2.4 billion to $3.4 billion and adjusted EBIT of $5.6 billion to $6.6 billion.
“Financially, the company’s 2019 performance was short of our original expectations, mostly because our operational execution – which we usually do very well – wasn’t nearly good enough,” Ford CEO Jim Hackett said in a statement. “We recognize, take accountability for and have made changes because of this.”
Ford’s issues in North America – which consistently provides the bulk of its profits – included $600 million in charges related to the recently-ratified UAW contracts. It also included manufacturing problems with the Explorer and Aviator, which Ford says have been ironed out.
Full-year North America EBIT fell 13 percent to $6.6 billion, meaning Ford’s UAW workforce will receive profit-sharing checks of $6,600 on average later this year.
Despite the fourth-quarter declines, there were some regional bright spots.
Ford in Europe made $21 million in the quarter, compared to a $199 million loss the same period a year ago, thanks to a product overhaul to focus on profitable segments.
The automaker’s $207 million fourth-quarter loss in China was 61 percent smaller than the same period a year ago.
