Ford CEO Explains Earnings Miss, Defends Strategy
Ford posted disappointing fourth-quarter earnings, after a charge for debt payments, higher costs to launch new vehicles, increasing commodity prices and a loss in its European operations. The news sent its shares down significantly, over 10 percent, on Friday.
"I think it's just a learning opportunity, again, to make sure that we help communicate all the different pieces that are moving on, but this is a great quarter for Ford, and it is a fantastic year. This is the best year we've had since 1999," Alan Mulally, president and CEO of Ford , told CNBC on Friday.
"We have a number of things that were in play. First of all, we're investing more in our new products during the fourth quarter, for the full year, which is great for 2011. We also didn't have a reoccurence of the stocks that we built up after the 'cash for clunkers' program, so we were a little bit down on volume on that. Plus, we were actually adding costs to grow the business for next year," Mulally said.
"Year-over-year, there's such a differece between what we went through in 2009 and 2010," he said.
Ford mortgaged most of its assets to borrow $23.5 billion in 2006, a move that allowed it to finance new product development while avoiding the life-saving government bailouts needed by its rivals General Motors and Chrysler.
"The most important thing we've been focused on...is to keep improving our fundamental operations, which we did again this year, generate free cash flow—we actually paid down $14.5 billion dollars of debt," Mulally said, adding, "43 percent reduction in our debt."
"We have great options now, in moving toward investment-grade and a much, much improved balance sheet during 2011," he said.
In addition, Mulally expects 10- to- 25 percent of Ford's fleet will be electric by 2020.
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