Ford posts first quarterly net loss since 2014

The loss was due largely to a $3 billion noncash adjustment of its pension obligations, but a $200 million charge for halting construction of the Mexican factory also weighed on profits.

Newly manufactured Ford Fiesta cars are seen on the deck of the car transport ship "Tossa" as it travels along the Rhine, from a Ford plant in the German city of Cologne to the Dutch seaport of Vlissingen, close to Emmerich in Germany in this September 13, 2013 file photo. Ford plans to cut hundreds of white-collar jobs in Europe to reduce costs by $200 million a year and revamp its model line-up as it targets sustainable profitability in the region, the carmaker said on February 3, 2016. REUTERS/Wolfgang Rattay/FilesShow less

Ford Motor reported its first quarterly net loss in two years due largely to pension accounting and costs associated with cancelling a small-car factory in Mexico.

The Dearborn, Michigan, automaker on Thursday reported a fourth-quarter net loss of US$783 million, compared with a $1.9 billion profit a year ago.

The loss was due largely to a $3bn noncash adjustment of its pension obligations, but a $200m charge for halting construction of the Mexican factory also weighed on profits. That was announced earlier this month amid criticism from Donald Trump, at the time the US president-elect, that Ford was shifting compact Focus production to Mexico.

Ford cancelled construction of the Focus plant in the fourth quarter, but still will shift production to the south in an existing factory. The company says no jobs will be lost due to the move because the current Focus plant near Detroit will build new a new small pickup and SUV.

Ford still had a great full year. For 2016, the company posted its second-best pretax profit ever at $10.4bn with net income of $4.6bn. Full-year net income fell 36 per cent from a year earlier. Revenue for the year rose slightly to $151.8bn.

Ford’s 56,000 US hourly workers will reap the benefits. They’ll get average profit-sharing checks of $9,000 based on pretax North American profits of just over $9bn.

Ford says it lost 20 cents per share for the quarter, but excluding special items, it made a 30-cent profit. That fell just shy of Wall Street estimates. Analysts polled by FactSet expected 31 cents per share.

Quarterly revenue fell 4 per cent to $38.7bn, but still beat analyst estimates.

The fourth-quarter net loss was Ford’s first quarterly red ink since the fourth quarter of 2014.

The chief financial officer Bob Shanks said the company is still trying to gauge the effect that the Trump presidency will have on the company, and hasn’t taken any specific actions. But it expects pro-growth policies and a possible corporate tax cut.

“We’re monitoring it very closely,” he said.

Shares fell about 1 per cent before the opening bell.

* Associated Press

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