Ford’s net income rose 9 percent in the first quarter due largely to a lower income tax rate, as the automaker promised additional efficiencies in the coming years.
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The automaker says it made $1.74 billion, or 43 cents per share, compared with $1.59 billion, or 40 cents per share a year ago.
The company also says it has found another $11.5 billion in cost cuts and efficiencies, bringing the total to $25.5 billion expected by 2022. Savings will come from engineering, product development, marketing, materials and manufacturing.
Ford on Wednesday promised to raise its operating profit margin from 5.2 percent to 8 percent by 2020, two years earlier than a previous forecast.
Revenue rose 7 percent to $41.96 billion.
Earnings and revenue beat Wall Street estimates. Analysts polled by FactSet expected 41 cents per share and revenue of $36.78 billion.
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One third of Ford’s efficiencies will come by the end of 2020, Chief Financial Officer Bob Shanks said told reporters.
Saving will come by optimizing digital marketing and discounts on vehicles, as well as putting multiple vehicles on one architecture. The company also plans to redesign its manufacturing freight network.
Shanks said Ford is “unleashing the creativity of the teams to challenge norms, challenge conventions. We’re not afraid to copy good results and good performance. I don’t think they’re done yet. There’s more work under way.”
He said the company will cut $5 billion from capital spending from 2019 to 2022, reducing it from $34 billion to $29 billion. The company will spend less on low-performing areas such as small cars and most Lincoln vehicles, although Shanks said Lincoln sales are growing and the brand is not in jeopardy. More capital will be allocated to higher performing areas such as trucks and sport utilities, he said.
Lower-performing areas will be targeted for restructuring and some areas could be targeted for “disposition,” Shanks said.
He defined disposition as a different business model, efficiency improvements, exiting or downsizing. “Whatever it takes,” he said.
