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Ford caps ‘challenging year’ with 19% decline in Q4 pretax profit

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Ford Motor Co.’s fourth-quarter adjusted pretax profits fell 19 percent to $1.7 billion due to higher steel and aluminum prices, as well as adverse currency rates, the automaker said Wednesday.
Ford’s fourth-quarter operating margin was 3.7 per cent, down 2 percentage points from a year earlier.
Net income swung to a gain of $2.4 billion from a year-earlier loss of $800 million, reflecting a lower effective tax rate and pension re-measurement. The year-earlier loss had been due mainly to accounting changes.
Revenue rose 6.7 per cent to $41.3 billion.
For the full year, Ford’s 2017 pretax profits fell 19 per cent to $8.4 billion, slicing its operating profit margin to 5 per cent from 6.7 per cent in 2016. Those declines were caused by a $1.2 billion hit in raw materials costs and a $600 million negative impact from Brexit.
Net income soared 65 percent to $7.6 billion, as revenue rose 3.3 percent to $156.8 billion.
“It was a very challenging year, but also a year of progress,” CFO Bob Shanks told reporters. “It’s very, very clear we have to improve the fitness of the business.”
Ford shares fell 4 percent to close at $11.57 on Thursday.
Ford’s earnings were driven by its North American region, where pretax profits fell 16 per cent to $1.6 billion in the fourth quarter, due to rising commodities and warranty costs plus expenses related to the launch of the Ford Expedition and Lincoln Navigator that Ford attributed to a supplier-related parts shortage that has since been fixed.
The warranty costs include an October recall of 1.3 million F-150 and Super Duty pickups to fix faulty side-door latches that cost the automaker $267 million.
Revenue in North America rose 4.3 per cent to $24.1 billion. For the full year, pretax profits fell 16 per cent to $7.5 billion in North America, even as revenue edged up 1 per cent to $93.5 billion.
As a result, Ford’s roughly 54,000 UAW-represented employees will get profit sharing checks of $7,500 on average. That’s down from the $9,000 they received last year.
In Europe, Ford’s pretax profit slid 66 percent to $56 million in the fourth quarter and tumbled 81 per cent to $234 million for 2017. Most of the full-year drop was attributed to Brexit-related charges, as well as higher commodity and warranty costs.
In South America, Ford’s pretax loss narrowed to $197 million in the fourth quarter, from a loss of $293 million a year earlier. For 2017, its pretax loss in the region narrowed to $784 million, from a loss of $1.11 billion in 2016.
In the Middle East and Africa, pretax losses narrowed slightly to $70 million in the fourth quarter from $71 million a year earlier, and to $263 million for the full year from $299 million a year earlier.
Pretax profits at Ford’s Asia Pacific business unit collapsed 98 percent, to $5 million in the fourth quarter from $284 million a year earlier, largely due to a sales drop in China. For the full year, pretax profits there slipped 11 percent to $561 million.
Ford Motor Credit Corp.’s fourth-quarter pretax profit jumped 53 percent to $610 million, and its full-year pretax earnings rose 23 percent to $2.3 billion.
‘Bad year’
Ford last week lowered its 2018 forecast for what CEO Jim Hackett characterized as a “bad year.” Its per-share guidance for 2018 translates to earnings of $8 billion to $9.2 billion, according to investment firm Barclays Capital, down from an initial forecast of $9.9 billion.
Shanks, speaking last week, said the company will face about $1.6 billion in increased commodities costs, including steel and aluminum.
Shanks said most of that impact will come from rising steel costs, and that aluminum represents just 25 percent of that negative impact. Ford’s crosstown rivals, including General Motors and Fiat Chrysler, have not highlighted commodities as a financial concern.
Adding to the financial woes are the company’s mobility investments, which were about a $300 million drag on earnings in 2017, the first year in which they’ve been broken out separately. Executives said mobility losses would be larger in 2018.
Shanks said that Ford isn’t as fit as its peers, and that is stopping it from achieving its desired profit margins of around 8 percent.
“We’re not able to get the same level of margins others may be able to,” Shanks said. “That shows the gap we need to address.”
Executives have said that Ford has started to implement business practices that should begin to bear fruit in 2019 and beyond, focused around Hackett’s mantra of “smart vehicles for a smart world.”
Those include $14 billion in costs cuts, simplifying orderable products, and tailoring its model lineup to higher-margin segments for different parts of the world.

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AutoBeat / Auto Trends

Motoring Tips: 38 FRSC Traffic Offences & Their Penalties

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If caught violating a traffic rule and you wish to wave your right to a court trial, the alternative is to pay the prescribed fine for the particular offence.

In line with our vision to engender an enlightened society with emphasis on the automotive sector, Autojosh presents a list of FRSC traffic offences together with their corresponding penalties.

  1. Traffic/Sign violation

•Penalty: N2, 000

 

  1. Road obstruction

•Penalty: N3, 000

  1. Route violation

•Penalty: N5, 000

  1. Driver’s Licence violation

•Penalty: N10, 000

  1. Dangerous driving

•Penalty: N50, 000

  1. Speed limit violation

•Penalty: N3, 000

  1. Vehicle Licence violation

•Penalty: N3, 000

  1. Driving under alcohol or drug influence

•Penalty: N5, 000

  1. Driving with worn-out tyre or without spare tyre

•Penalty: N3, 000

  1. Driving without or with shattered windscreen

•Penalty: N3, 000

  1. Overloading

•Penalty: N5, 000

  1. Driving without seatbelt

•Penalty: N2, 000

 

  1. Driving a vehicle without forged documents

 

Penalty: N20, 000

 

  1. Failure to report an accident

 

Penalty: N20, 000

 

  1. Vehicle number plate violation

 

Penalty: N3, 000

 

  1. Wrongful overtaking

 

Penalty: N3, 000

 

  1. Road marketing violation

 

Penalty: N5, 000

 

  1. Caution violation

 

Penalty: N3,000

 

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AutoBeat / Auto Trends

Hyundai posts strong April 2018 global sales

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Hyundai Motor Company, South Korea’s largest automaker and No.1 Selling Korean automaker in the world, has announced its global sales results for April 2018, posting a total of 391,197 units sold, up 11.1 per cent from a year earlier.

The highest growth since December 2014 was led by strong sales of new SUV models – the all-new Santa Fe and Kona – while a recent sales rebound in the Chinese market also largely contributed to the growth.

Sales in overseas markets totaled 327,409 units, representing an increase of 12.2 per cent year-over-year. Sales increased significantly as the company’s popular subcompact SUV Kona expanded to key markets and demand remained strong in emerging markets such as Brazil, Russia and India.

Sales in the Korean market increased by 5.7 per cent compared to the same period of the previous year, recording 63,788 units sold. The all-new Santa Fe became the best-selling model in Korea for the second consecutive month, posting 11,837 units sold.

Hyundai Motor plans to maximize profitability by continuing its SUV sales momentum globally.

Monthly sales figures provided in this press release are unaudited and on a preliminary basis.

Hyundai Motor currently has overseas plants in Brazil, China, the Czech Republic, India, Russia, Turkey and the U.S.

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AutoBeat / Auto Trends

Volkswagen forecasts Nigeria automobile market rebound

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Volkswagen AG expects a rebound in vehicle sales in Nigeria as the economy recovers, the head of the company’s South African operations said.

Sales in the West African nation dropped to less than 40 units last year, according to the company. Nigeria was one of several African oil exporters hit hard when crude prices crashed in 2014, but the economy is recovering as oil rebounds.

“Now that the oil price has been recovering hopefully this situation will reverse and we can assemble and see a few hundred cars in the next year or so,” Thomas Schaefer said in an interview at a conference in the Rwandan capital, Kigali.

Volkswagen resumed building cars in Nigeria in 2015, it’s first factory on the continent outside South Africa. The company is set to start producing models including the Polo, Passat and Teramont at an assembly plant in Rwanda next month.

We are “expecting to start with at least 2,000 cars in 2018 alone, but I would love to get to 10,000 cars,” Schaefer said.

While VW is continuously assessing opportunities in countries like Ethiopia, Ghana and Tanzania for expansion, “with these new markets it is a bit of a long shot,” he said.

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