Ford’s warned it’s 2017 results wouldn’t be pretty. And they weren’t.
The automaker closed the books on a difficult year Wednesday, with lower operating profits, higher costs and thinner margins.
The number of cars it sold during the year also fell, but thanks to higher average car prices, sales actually edged higher. But profits were hurt by more expensive materials, like steel, as well as increased warranty costs and its investment in the launch of the Expedition and Navigator SUVs.
Ford, the second largest U.S. automaker behind General Motors, said earlier this month it expected to disappointing results for 2017. It also said its 2018 profits would also fall short , given rising commodity costs and he company’s need to invest more in developing SUVs, electric and autonomous driving vehicles.
“To be clear again, we are not satisfied with our performance,” Chief Financial Officer Robert Shanks told analysts at a January 16 investor conference. Shares of Ford plunged last week as a result of that new guidance, and they dipped again in after-hours trading on the latest report.
The disappointing financial results and poor stock performance is one reason that Ford replaced CEO Mark Fields with Jim Hackett, who had been overseing the autonomous driving car business.
For the industry as a whole, U.S. new car sales posted a 1.8% decline last year, the first drop in sales since 2009. But that sales volume is still near record levels. And for the most part automakers are expected to report good results thanks to global sales growth and the fact that car buyers are paying record average prices.
Ford’s tough year will mean that profit sharing checks for about 54,000 hourly U.S. factory workers at Ford will fall to an average of $7,500 compared to a $9,000 payment a year ago.