Share this article

print logo

Ford earnings plunge by 56% as high product costs, slow sales take toll

DETROIT – The Ford Motor Co. reported Thursday that net income for 2014 plunged 56 percent from the previous year, as the automaker struggled with high product costs, lower volume and troubles in its international operations.

For the year, Ford said that it earned $3.19 billion, down from $7.18 billion in net income during 2013 and that its global revenue fell 2 percent from the year before.

Ford President and CEO Mark Fields said that while the company faced difficulties last year, expenses for new vehicles and factories in markets such as China were necessary for longer-term success.

The year “was a solid yet challenging year for Ford, with our investments and a record number of new products launched around the world positioning us for strong growth this year and beyond,” Fields said.

The fourth quarter was particularly challenging for Ford, which is second to General Motors among U.S. automakers. Ford’s net income was $52 million in the quarter, a sharp decrease from the $3.07 billion it earned in the year-ago period.

The decrease was partly attributable to special pretax charges of $1.2 billion taken during the quarter, including an $800 million charge to account for currency fluctuations in Venezuela.

Ford introduced two dozen new vehicles last year, including a revamped version of America’s top-selling vehicle, the F-Series pickup truck. The introductions were expensive and cost Ford sales during the changeover. For 2014, the company said that it sold 6.32 million vehicles, down from 6.33 million the year before.

Despite cost pressure and lower sales, Ford’s operations in North America continued to be the bright spot. Pretax profit in North America was $1.55 billion in the fourth quarter, down from $1.8 billion a year earlier. For all of 2014, Ford posted pretax profit of $6.9 billion in the region, compared with $8.8 billion the previous year.

The company said that it expected stronger results overall this year and that pretax profit should return to 2013 levels or exceed them.

Ford’s results translated into average profit-sharing checks of $6,900 for the company’s 50,000 union workers in the United States, a decrease from the $8,800 payments that members of the United Auto Workers union received last year, based on 2013 results.

The company’s international operations had mixed results. In South America, Ford reported a pretax loss of $1.16 billion for 2014, compared with a loss of $33 million the previous year.

Ford continued to lose money in Europe but narrowed its losses somewhat, reporting a pretax loss of $1.06 billion, compared with $1.44 billion in 2013.