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  • Ford Loses $2.8B in Q4 as Restructuring, Pandemic Hit Bottom Line

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    Ford CEO Jim Farley expects the company’s restructuring will begin to produce positive results.

    Ford Motor Co. ended 2020 posting a loss for the final quarter of the year as well as for the full year as the pandemic wreaked havoc on the company’s already difficult financial position.

    The automaker reported a net loss of $2.8 billion, or 70 cents per share, on revenue of $36 billion during the fourth quarter, pulling the full year’s results down to a net loss $1.3 billion, or 32 cents per share, on revenue of $127.1 billion.

    In the midst of a corporate-wide restructuring process to improve its profitability, the company was also hit hard — like most automakers — by the COVID-19 pandemic. While the numbers weren’t great, it’s a means to an end.

    “We are profoundly changing the trajectory of our earnings power,” said John Lawler Ford’s chief financial officer, “unlocking the tremendous value Ford can create for customers, shareholders and other stakeholders.”

    Sticking to the plan

    Ford CFO John Lawler said the automaker could lose 10% to 20% of its Q1 production due chip shortages.

    That earnings power is focused on securing an 8% adjusted EBIT margin, specifically 10% in the U.S. and 6% in Europe with the rest of the company’s regional operations turning a profit too. Lawler said the company’s third and fourth quarter results “provided evidence of progress” in the company’s effort to improve profitability.

    Despite the losses, Ford did improve its overall liquidity, finishing 2020 with $31 billion in cash and a total liquidity of almost $47 billion.

    On an adjusted basis, the company’s EBIT of $1.7 billion, up from $485 million during the year-ago period. The automotive EBIT margin was 3.8%. The company noted that the gains were “broad-based and largely resulted from improved pricing and lower structural costs, as well as the overlap with UAW contract-ratification costs in 2019.”

    Company officials acknowledged the year wasn’t what they hoped and were optimistic about 2021. Ford’s Lawler said the company was on course to earn $8 billion to $9 billion in adjusted EBIT – including a $900 million non-cash gain on its investment in Rivian – and generate $3.5 billion to $4.5 billion in adjusted free cash flow in 2021.

    Semiconductor shortage may hit bottom line

    This optimism comes despite an ongoing issue with semiconductor availability. Lawler said the company was diligently monitoring the situation, but it is “so liquid” that it’s tough to determine what the impact on the bottom line will be.

    He did estimate the company could lose as much as 20% of its first quarter production as plants are forced to shut down temporarily, and that those losses could continue throughout the first half of the year. It’s possible to make up some of that in the second half, he noted, but it was too early to tell.

    The shortages could lower Ford’s 2021 adjusted EBIT by $1 billion to $2.5 billion, he said. He added the company expects full-year cash and EBIT effects to be about equal – with quarterly cash implications more volatile, given the mechanics of company working capital.


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  • FCA CEO Manley Gets New Assignment Following Stellantis Merger

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    FCA CEO Mike Manley apparently will settle into a new role after the merger with PSA is complete: Head of the Americas.

    Mike Manley, the CEO of Fiat Chrysler Automobiles and one of the architects of FCA’s merger with PSA Group, will take a new role as Head of the Americas once the deal is completed.

    There have been numerous questions about what, if any, role the 56-year-old Manley would play after the creation of Stellantis as John Elkann, currently the chairman of FCA, will retain that post at Stellantis while PSA chief executive officer Carlos Tavares will become the new organization’s CEO. Senior officials at both of the carmakers had indicated Manley would get a new role, undefined until today.

    Crediting Manley for “having led the profound transformational and exceptional development” of both the Jeep and Ram brands, while guiding FCA through “the rough terrain of the past couple of years,” Elkann announced Friday in a letter to employees that “Mike will be asked to take up the role of Head of Americas” once the merger is completed.

    (FCA CEO Manley won’t be on the board after merger with PSA is completed.)

    Carlos Tavares, PSA (left) and Manley shake hands following the signing of the merger agreement. Manley now has a position in the new company.

    The deal, which now has cleared a number of critical hurdles, including a regulatory probe by the European Union, is expected to close sometime during the first quarter of 2021.The merger will create the world’s fourth-largest automaker by sales volume.

    The British-born Manley started his career as a trainee at UK car financing firm Swan National. He subsequently spent time working on the retail side of the business at Renault and Peugeot dealerships before joining what was then DaimlerChrysler in 2000. Three years later, he was transferred to the United States.

    Following the breakup of DaimlerChrysler and Chrysler’s subsequent push through bankruptcy, Manley found himself one of the key players in the tight-knit group of executives surrounding Sergio Marchionne, the architect of the automaker’s merger with Fiat.

    It was as the new head of the Jeep division that Manley came into the spotlight, however. The brand’s name often was used as a synonym for SUV but, despite the surging demand for utility vehicles overall, Jeep sales remained relatively stagnant. Under Manley, the brand saw demand nearly quadruple, from around 323,000 in 2009 to 1.2 million in 2015 – the numbers reaching 1.5 million last year. Manley also was given the leadership role for truck brand Ram which has seen a surge in sales of its own.

    Manley was clearly positioned as Marchionne’s top lieutenant when the two led a presentation of a new five-year plan in June 2018. But, barely a month later, Manley was elevated to the CEO spot following Marchionne’s unexpected death during surgery.

    (Fiat, PSA set to get EU go-ahead to complete Stellantis merger.)

    Manley headed up Jeep after holding several posts within the company.

    If anything, the British native continued to follow the playbook laid out by his predecessor – which included a goal of finding a new merger partner. Marchionne had, during his tenure, approached an assortment of competitors, including both Volkswagen and General Motors, repeatedly being turned down.

    FCA and PSA had already established ties by the time Manley was named CEO, jointly working on several projects. And there were rumors early in 2019 that something more substantial might be in the works. Instead, that spring Fiat Chrysler announced plans to merge with PSA’s French archrival Renault. The deal was scuttled at the last minute by the French government which worried it might cause the collapse of the Renault-Nissan-Mitsubishi Alliance.

    Months later, Manley confirmed that FCA was talking with its old ally PSA, whose list of brands include Peugeot and Citroen. The deal was completed in November 2019 but subsequent announcements raised questions about what, if any, role Manley would play in the soon-to-emerge company called Stellantis.

    Elkann, heir to Fiat’s founding Agnelli family, was to retain his position as chairman while the CEO post would go to Tavares, a former top executive at Nissan who came in to turn struggling PSA around in 2014.

    FCA Chairman John Elkann selected Manley to succeed former CEO Sergio Marchionne.

    In his role heading the Stellantis unit in North, South and Central America, Manley will have a major responsibility. That will include not only steering the enterprise’s efforts to recover from the COVID-19 pandemic but also overseeing plans to bring the Peugeot brand back to the United States. It has been out of the market for nearly three decades but laid out a multi-tiered revival plan several years ago starting with its operation of a ride-sharing service based in Los Angeles.

    Manley, who was set to directly address FCA employees on Friday, will not retain his current seat on the board once the Stellantis merger is completed. Elkann and Tavares will be the only executive members.

    (Fiat Chrysler and PSA not exactly a “merger of equals.”)

    Based on combined 2019 sales, Stellantis will immediately become the world’s fourth-largest automaker by sales volume, behind only Volkswagen, Toyota and the Renault-Nissan-Mitsubishi Alliance – but ahead of General Motors which dropped down the list after closing numerous overseas operations and selling its European Opel/Vauxhall subsidiary to PSA.


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  • Fiat Chrysler Posts Slightly Smaller Loss; North America Profitable

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    Fiat Chrysler Automobiles revealed a second-quarter loss of $1.24 billion on Friday, down slightly from the $1.8 billion net loss posted for Q1.

    As before, the pandemic weighed heavily on the automaker’s finances, though this spring’s two-month shutdown of domestic manufacturing and the revenue drop arising from the virus didn’t spell red ink for its all-important North American region.

    Overall, net revenues tumbled 56 percent, year over year, in the second quarter. Adjusted earnings before interest and taxes stood at negative $1.1 billion, which is half of the $2.2 billion loss predicted by a smattering of analysts polled by Reuters. The automaker’s recovery began in earnest in June. FCA said.

    “Our second quarter showed that decisive actions and extraordinary contributions from our workforce enabled FCA to contain the impact of the COVID-19 crisis,” said CEO Mike Manley in a statement. “While the company remains vigilant about the health and safety of employees, our plants are up and running, dealers are selling in showrooms and online, and we have the flexibility and financial strength to push ahead with our plans.”

    In the automaker’s North American bread basket, second-quarter adjusted pre-tax earnings were in the positive, at $46 million. Net revenue fell 53 percent due to lower sales volumes, though actual shipments were off 62 percent.

    FCA said the ongoing pandemic makes it even more eager to leap into bed with France’s Groupe PSA.

    “The COVID-19 crisis has further underlined the compelling logic of the Groupe PSA and FCA merger. Work by both teams towards the completion of the merger has continued apace and we expect to meet the objective of combining as a single company by the end of the first quarter of 2021,” the automaker stated.

    “Antitrust approvals have already been granted by twelve of twenty-two jurisdictions. The review initiated by the European Commission is not expected to delay the merger timetable.”

    You’ll recall that July delivered news of a new name for the combined companies: Stellantis.

    [Image: Fiat Chrysler Automobiles]


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