Ford sees improving conditions across regions by 2020 image

Ford Motor shares took a dive yesterday following the company’s announcement that it decided to trim down the forecasted profit figures for both 2014 and 2015.

Following increased recall costs in North America and higher than expected losses in certain regions – such as Russia or South America – Ford decided to trim the pre-tax profit outlook for this year and 2015 ($6 billion in 2014 and $8.5 to $9.5 billion in 2015, respectively).

On the other hand, executives reassured investors that by 2020 the situation would swing back, as the regions would soon recover. Now, the 2015 pre-tax outlook for Europe has been forecasted at a $250 million loss – although the company also sees a return to profitability possible. By 2020, the region’s pre-tax operating margins should fall in the 3 to 5% zone.

The Asia-Pacific zone, riding on the high sales advances made in China, the world’s largest auto market, is predicted to grow deliveries by 51 to 53 million units by 2020, climbing from initial forecasts of 40 million to 42 million in 2015. The pre-tax operating profit in 2014 should be of $700 million, and even higher in 2015. The US automaker also enjoys high margins in the region, and they are expected to rise to 12-14% by 2020.

Accordingly, North American sales are expected to surge from 2.9 million units annually in 2013 to around 3.5 million vehicles by 2020, with an operating margin of between 8 and 9% in 2014.

Via Reuters