Ford’s profit plummets by almost half, cuts 2018 outlook

Ford’s second-quarter earnings plunged by almost 50 percent and the company lowered its 2018 earnings projections, citing a disruption in the production of its popular F-150 pickup truck and heavy losses in China during the quarter.

Ford missed Wall Street estimates and lowered its 2018 earnings guidance to an adjusted earnings per share of between $1.30 and $1.50, from between $1.45 and $1.70 executives forecast earlier this year, according to www.cnbc.com,

The Detroit automaker additionally said restructuring expenses, designed to focus the company on its more profitable businesses, could cost up to $11 billion over the next three to five years.

The company earned $1.07 billion, or 27 cents per share, about half the $2.05 billion it made during the same three months last year. Analysts polled by Thomson Reuters expected Ford to earn 31 cents per share.

Ford’s Chief Financial Officer Bob Shanks told CNBC the company’s commodity costs were about $300 million higher from last year, attributing about half of that to the U.S. tariffs on steel and aluminum. The tariffs are expected to eat up about $600 million in profit this year, he said.

It generated $38.92 billion in total revenue, down from the $39.85 billion during the same period in 2017.

All of that drop came from its automotive division, where revenue fell by $1.2 billion from the second-quarter of last year to $35.91 billion.

Analysts are watching to see how the changes Jim Hackett has made in his first year as CEO are playing out. Hackett embarked on an ambitious restructuring plan and boldly decided earlier this year to phase out all of Ford’s sedans, except for the iconic Mustang. He’s been slashing costs and trying to refocus most of its production on its best-selling SUVs, trucks and other profitable ventures.

“We’re clearly committed to redesigning and restructuring the underperforming parts of our business,” he said in a statement announcing the company’s results.