Ford targets higher margins faster, will drop unpopular sedans

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Detroit | Published: April 26, 2018 2:09:57 AM

Ford Motor Co on Wednesday outlined a plan to cut costs and boost profit margins at a faster pace.

aord, sedans, automobile sector, autobile industryFord reported a better-than-expected first-quarter profit. (Reuters)

Ford Motor Co on Wednesday outlined a plan to cut costs and boost profit margins at a faster pace than previously announced, which includes dropping increasingly unpopular sedan models in North America.

The No. 2 U.S. automaker said it now plans to cut $25.5 billion in costs by 2022, up from a total of $14 billion the company announced to investors last fall.

Ford said it now expects to hit a pretax profit margin of 8 percent globally and 10 percent in North America by 2020, ahead of a previous target of 2022.

Responding to a shift in consumer demand to SUVs, Ford said it planned to trim its North American car portfolio to just two models: the sporty Mustang, which debuted 50 years ago this month and a new compact crossover called Focus Active that will be introduced in 2019.

Ford said it “will not invest in next generations of traditional Ford sedans for North America,” including the midsize Fusion and full-size Taurus.

The automaker has been under pressure from Wall Street investors to improve its product lineup and lift flagging profit margins.

Speaking to reporters as the company reported first-quarter results, Chief Financial Officer Bob Shanks said “we have looked at every single part of the business.”

“We are driven to turn this business around.”

Ford reported a better-than-expected first-quarter profit, with a 7 percent increase in revenue and a lower effective tax rate offset a jump in costs, especially higher commodity prices.

The No. 2 U.S. automaker reported a first-quarter net profit of $1.74 billion, or 43 cents per share, up from $1.6 billion, or 40 cents per share, a year earlier. Analysts had on average expected earnings per share of 41 cents.

Despite the higher profit, Ford’s adjusted pretax profit margin fell to 5.2 percent from 6.4 percent in the same quarter in 2017.

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