Ford expects profits dip in 2017

Ford Motor Co. said it expects profits to decline next year before rebounding in 2018 as it increases investments in new business models.

Targeting cost savings of $3 billion yearly in its core operations, the company on Wednesday said it projects positive cash flow through at least 2018 and asserted that Ford stock is a “strong investment with attractive upside.”

Ford said it is targeting operating margins of at least 8 percent for its core business and 20 percent for the mobility services and other “emerging businesses” it is getting involved in.

Ford Chief Financial Officer, Bob Shanks said: “We expect Ford’s performance to be strong through 2018 — with our core business improving, allowing us to invest in the emerging opportunities that will ensure our future success.”

In a statement released ahead of a daylong gathering of investors and analysts at its headquarters, Shanks said: “Our capital allocation continues to be disciplined and to deliver strong returns, and we are fully prepared for a downturn. As a result, we plan to offer a secure regular dividend through the business cycle with an option for upside on investments to keep our core business strong and to win in emerging opportunities.”

Ford outlined three ways it plans to improve its business: increasing sales of its lucrative trucks and utility vehicles, making small and luxury vehicles more profitable, and investing in electrification, autonomy and mobility.

It said adjusted pretax profits for its core business would improve every year from 2016 through 2018 but that total earnings would decline next year due to higher investments and costs related to emerging opportunities. The company expects an adjusted pretax profit of $10.2 billion this year, 5.6 percent less than the $10.8 billion it earned in 2015.