"We should have done much better last year," said CEO Jim Farley.
Dearborn-based automaker Ford announced that it lost $2 billion for the entirety of 2022, with CEO Jim Farley expressing disappointment over the financial figures.
Revenue for last year totaled $158.1 billion, and during the same period, the automaker recorded a net income of $1.3 billion. The adjusted earnings before interest and taxes (EBIT) sits at $10.4 billion - more than a billion less than initially forecast. Farley wasn't too pleased and said that Ford should have done better in 2022.
"We left about $2 billion in profits on the table that [was] within our control, and we're going to correct that with improved execution." However, the chief exec remains hopeful that 2023 will yield greater returns.
"I'm excited about 2023, which is pivotal for us. We've got clarity and ambition with the Ford+ plan, a strong team carrying it out, and a lineup of great products and customer experiences [that are] getting even better," said Farley.
According to CFO John Lawler, the Blue Oval plans to invest in the Ford+ growth plan and simultaneously return capital to shareholders. The automaker also plans to target distributions of 40% - 50% of free cash flow.
Ford has also declared a first-quarter regular dividend of 15 cents per share and a supplemental dividend of 65 cents per share.
So what is behind these underwhelming financial results? As per Automotive News, Farley admitted that Ford has "deeply entrenched issues" that are difficult to deal with. "The strength of our products and revenue has masked this dysfunctionality for a long time."
Lawler also added that these lost profits could be attributed to missed volume targets, high costs, and poor supply chain management. Like many car companies, the American automaker has struggled to navigate the chip crisis and supply chain issues. It has even taken to selling vehicles without crucial features to get them out of the factory.
"There are issues in our industrial system. We're not yet operating as productively or as efficiently as we need to. In the simplest terms, we need to improve quality and lower costs now," added Lawler.
It's not all bad news. Ford managed to make $47 million in Europe, $413 million in South America, and $628 million in International Market Groups. However, it lost $572 million in China.
Despite the threat of a looming recession in the USA and Europe, Ford hopes to earn between $9 billion and $11 billion. This includes a forecast for the aforementioned economic shrinkage.
Lawler said Ford will go on a cost-cutting exercise. The automaker has said before that it hopes to trim $3 billion in costs by the middle of the decade, but the CFO added that Ford is now looking at more than that. "We're going to be very aggressive," he said.
With the new Mustang on the horizon and strong sales across the range, Ford's future remains bright. Hopefully, the automaker can turn things around and post better financials this year. Otherwise, it faces the risk of being overtaken by rivals.
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