Automotive - - Jan 27,2017
US-based automobile giant Ford announced its annual pre-tax profit for 2016 at $10.4 billion – the company’s second highest profit till date.
This means that more than 56,000 hourly workers in the US will receive an average of $9,000 profit share, based on the profit that Ford made in North America.
While North America is the biggest market for Ford; in 2016, the European plants also contributed a record breaking $1.2 billion for the auto giant.
Notably, the company reported a drop in its net income of $800 million in the fourth quarter, its first loss in last seven years, majorly because of the relatively new pension accounting and the cancellation of the Mexico plant.
Earlier this month, Ford announced that it would cancel its $1.6 billion plant planned in Mexico and would instead expand its operations in Michigan. Ford revealed that the cancellation cost is $200 million as fines, but it also saved $500 million that it otherwise would have paid for moving production to an existing plant there.
Mark Fields, chief executive officer of Ford, said that the decision was taken partly due to the falling sales of Ford’s small cars and partly as a “vote of confidence” in President Donald Trump’s policies.
The company also suffered a major $600 million blow due to safety recalls over a door hatch.
But all these losses were easily made up by the previous quarters with a total net gain of $4.6 billion for the year. Since 2015 was a bullish year for Ford, year on year comparisons for 2016 would be tough to make.
Wholesale volumes and revenues were down only in the last quarter of 2016. Revenue was $38.7 billion for the last quarter, whereas it was almost $152 billion for the year, up by $2.2 billion from 2015.