DEARBORN - President and CEO Alan Mulally kicked off the fourth quarter and full year Global Town Hall for employees with enthusiasm for last year’s progress and plans for 2013.
“I just want to say congratulations and thank you,” said Mulally. “What an unbelievable year in 2012 with everything we have dealt with and the fact that we have a really solid plan going forward.”
Ford reported fourth-quarter pretax profit was U.S. $1.7 billion, or $0.31 per share,while net income for the fourth quarter was $1.6 billion, or $0.40 per share. For the full year, Ford announced a pretax profit of $8 billion, or $1.41 per share, and a net income of $5.7 billion, or a $1.42 per share.
“We have the highest fourth quarter and total operating profit in more than a decade,” he said. “And, we are profitable for the 14th-consecutive quarter.”
Ford ended 2012 with automotive gross cash of $24.3 billion, exceeding debt by $10 billion, and a strong liquidity position of $34.5 billion, an increase of $2.1 billion over 2011.
North America reported a fourth-quarter pretax profit of $1.9 billion, nearly a billion dollar compared to a year ago. For the full year, automotive pretax profit was about equal to last year.
“What a tremendous performance by North America,” said Mulally.
South America also has a fourth-quarter pretax profit of $145 million, a $37 million increase compared to a year ago. For the full year, South America reported a pretax profit of $213 million, a $648 million decrease from last year. Europe continues to be negatively impacted by the challenging economic conditions in the region, posting losses for both the fourth quarter and full year.
Asia Pacific and Africa saw improvements in the fourth quarter with a pretax profit of $39 million, a $122 million increase over a year ago. For the full year, Asia Pacific and Africa posted a loss; however, it sold more than 1 million vehicles for the first time and recorded $10 billion in revenue – also a record.
“Asia Pacific and Africa continues a really strong performance,” he said. “Best ever on their sales, their market share and their revenue.”
Ford Credit continues to support the company with profits, reporting a fourth-quarter pretax profit of $414 million, a decrease of $92 million from a year earlier. For the full year, Ford Credit posted a pretax profit of $1.7 billion in 2012, compared with $2.4 billion a year ago.
“A very strong performance for Ford Credit,” said Mulally. “And it continues to be a strategic asset for the company.”
Looking to next year, Mulally shared the business environment for the different regions and predictions for growth coming year. Globally, Ford expects the economic growth to be about 2 to 3 percent.
“We’re still in a very good, growing industry,” he said.
For the Americas, the economic growth is expected to be in the 2 to 2.5 percent range for the upcoming year.
“This is a slower economic response than we’ve had in past recessions, but clearly we are recovering from the most severe recession we have ever been in since the Great Depression” said Mulally. “We’re encouraging everybody and all of our elected leaders to make sure we really look through the lens of economic development for the good of all of us.”
Also, Ford is hopeful that the situation will become less volatile in South America and in the long term return to a free trade environment.
Europe has weak economic conditions in several markets, with a lot more work to go to deal with the sovereign debt issues. In Asia Pacific and Africa the recovery is underway; growth has slowed down to a more sustainable rate.
Mulally also took a moment reflect on the lessons from the past year.
“Clearly our One Ford plan is working,” he said. “As Raj Nair said the other day, ‘we could never be delivering this full-family of best-in-class vehicles if we didn’t have One Ford.’
“A strong year for 2012, but we were short on market share, quality and profit versus the plan. We also learned a lot last year about growth. This is relatively new to us. It’s a huge transition from going out of business to growing.”
Ford is growing substantially in North America and in Asia Pacific and Africa and the company has learned some important lesson on the importance of delivering on launches. The company learned about the effects of quality in North America on purchase decision and pricing. Market share was down for the company since dealers didn’t have the vehicles in the right quantity at the right times.
“The message for all of us is that we are moving into an important time of executing on the plan,” said Mulally. “We’ve got a fantastic plan but we’re going to have to pull together like never before to execute.”
Following the outlook for 2013 Mulally opened up the floor to employees to ask questions on the business.
An employee from Thailand asked a question about the Global Product Development System (GPDS) and steps the company is taking to improve the process. Mulally asked Raj Nair, group vice president, Global Product Development, to lead on answering the question.
“Based on a lot of the results we’ve had, improving GPDS has been a real focus for us,” said Nair. “Perhaps even more so a reflection on how committed we are to improve delivery and to improve quality is we’ve actually put a little bit more time into GPDS – for the first time in my career.
To close out the Town Hall, Mulally shared a few more thoughts on the year going forward.
“A phenomenal year in 2012 and we have a great plan for 2013. The plan is great, the products are great, and I think that we’re all going to really pull together. This is going to be an execution and operational excellence year.
“Thanks a lot for everything you’re doing for Ford. Just take a breath every once in a while and appreciate what we’re doing. It’s absolutely phenomenal. We’re contributing not only to great products but a strong business for the long term and a better world.”