Ford Motor Company (NYSE:F) Warns Increased Spending To Affect 2017 Profitability


Ford Motor Company (NYSE:F) sees a less profitable 2017 compared to 2016 if its guidance for the current year is anything to go by. The nation’s second-largest automaker says its earnings for the year could take a hit on increased spending on emerging opportunities such as self-driving cars. Even with the sad news to investors, the company has reiterated its commitment to maximizing shareholder returns.

Ford’s Shareholders Returns

The Dearborn-based automaker says its board has approved a 15 cents a share dividend for the current quarter, equal the same amount it issued last year. In addition, the company has confirmed a $200 million or $0.05 per share, supplemental cash dividend for the current year. Pending board approval, the automaker is set to shell out $2.8 billion to shareholders this year.

Ford says it is on track to deliver $10.2 billion in adjusted pretax profit for the 2016 fiscal year. However, it does not expect its profit to improve this year, given increased capital expenditure. Another major cause of alarm that could eat into the automaker’s profitability among other automakers is President-elect, Donald Trump, pledge to clamp down on foreign manufacturing.

General Motors Estimates

CFRA Research analyst reiterating that Auto sales could decline by 1.75% is also seen as another headwind that could eat into Ford’s profitability. Even as Ford downplayed its ability to build on its performance last year General Motors appears to be more confident of posting an improved performance in 2017.

General Motors says it expects its full-year earnings to come in the range of between $6 and $6.50 a share compared to analysts’ estimates of $5.71 a share. The automaker has also forecasted higher revenue for the current year as well as $6 billion in free cash flow.

Just like other tech and auto companies, General Motors Company (NYSE:GM) and Ford continue to bet big on the future with investments in emerging technologies such as autonomous cars and ride sharing services. Ford has already reiterated plans to unveil 13 electrified cars over the next five years, GM having invested $500 million in ride-hailing firm Lyft.

Ford stock was up by 1.74% in Tuesday trading session ending the day at highs of $12.85 a share.

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