UAW workers will receive $7,600 in Ford Profit Sharing checks, up to $100 from the year before, despite lower profits in 2018, the company stated Wednesday.
The Dearborn automaker, which made $47 million last year, stated ford profit sharing as part of its full-year 2019 earnings report Tuesday. Its pre-tax profits in North America totaled $6.612 billion.
Workers should see the income in March, according to the company. Last year, Ford paid near $7,600 to eligible hourly full-time UAW members on a $7.6 billion North American profit.
“UAW Ford members negotiate profit-sharing in their contracts so that they can share in the success of the company and its profits,” Gerald Kariem, UAW vice president and Ford Department director, announced in a statement. “Today’s announcement is a testament to UAW Ford members’ hard work and the great products that they make.”
Ford published 2018 earnings before interest or taxes of $7 billion, down from $9.6 billion in 2017. The company said it made $7.6 billion pretax in North America, which will result in the $7,600 Ford profit-sharing checks on average for a majority of the company’s 56,000 hourly UAW workers. North America and Ford Credit were the company’s only profitable units.
Net income, or profit after taxes and other charges, was $3.7 billion, down from $7.7 billion in 2017. Ford Profit sharing was $7,500 last year.
Ford stated it changed its reporting in 2018 to establish a mobility business unit, separate from the North American unit that drives the profit-sharing formula.
That’s why profit sharing grew despite profits being down. Ford awards its UAW employees $1,000 in profit sharing for every $1 billion in North American profit before taxes.
Not all hourly workers are eligible for the benefit, which is based on profits in North America. Workers get profit-sharing checks in the spring.
Ford blamed company challenges in Europe and particularly China for the drop in earnings compared with 2017. The company saw full-year revenue of $160billion in 2018, up 2percent from 2017, generated primarily by sales in North America.
“While 2018 was a challenging year, we put in place key building blocks to build a more resilient and competitive business model that can thrive no matter the economic environment,” Chief Financial Officer Bob Shanks stated in his prepared comments throughout a media briefing at company offices in Dearborn. “We are confident in our plan to transform our business.” He noted that Ford has $23.1 billion cash on hand.
Ford Profit Sharing dropped as much as 11% in the extended session Tuesday after the U.S. automaker missed adjusted profit expectations and posted a GAAP loss for its fourth quarter.
Ford F, -9.75% stated it lost $1.7 billion, or 42 cents a share, in the quarter, compared with a loss of $100 million, or 3 cents a share, in the year-ago period. The GAAP loss included a previously disclosed $2.2 billion charge related to pensions.
Adjusted for one-time items, Ford said it gained 12 cents a share, compared with 30 cents a share a year ago. Revenue fell 5% to $39.7 billion from $41.8 billion a year ago.
Analysts polled by FactSet had expected the automaker to report set earnings of 17 cents a share on sales of $39.6 billion. The analysts had seen a GAAP profit of 15 cents a share for the quarter.
The stock tumbled 8.2% in premarket trading Wednesday, which puts it on track to open at the lowest price seen during regular session hours since March 2019.
”Financially, the company’s 2019 performance was short of our original expectations, mostly because our operational execution wasn’t about good enough. We recognize, take accountability for and have made changes because of this,” Chief Executive Jim Hackett told in a statement.
“The results were not OK in 2019,” Ford Chief Financial Officer Tim Stone told reporters at the company’s headquarters outside Detroit.
“As I look to 2020 and beyond, I’m very optimistic,” he answered while cautioning that Ford’s lower guidance does not yet account for the potential impact of the coronavirus outbreak in China.
In an after-hours call with financial analysts, Chief Executive Jim Hackett was blunter about the challenge of balancing Ford’s protracted turnaround efforts with its continuing work on future technology, including electric and self-driving cars.
“I don’t think this company can keep straddling the old and new worlds forever … This company has to change,” Hackett said.
Ford announced it expects 2020 operating earnings to be in the range of 94 cents to $1.20 a share. Analysts were expecting $1.26 a share.
Stone said Ford expects to continue its quarterly dividend of 15 cents, which could cost the company $2.4 billion in 2020. Asked about continuing the dividend after lowering its 2020 guidance, Hackett said, “We like to return value to shareholders.”
The disappointing 2020 forecast, coming after Ford previously trimmed its 2019 outlook, is a blow for Hackett, who took the helm in May 2017.
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