APRIL 25, 2014
Bank of America Conference
(PRELIMINARY
RESULTS)
April 1, 2015
Joe Hinrichs
Executive Vice President, Ford Motor Company
President, The Americas
Bank of America
Merrill
Lynch -2015 New York Auto Summit
Bank
of America
Conference
April
1, 2015
April
1, 2015
AGENDA
• One Ford Plan Update
– North America
– South America
• 2015 Planning Assumptions and Key Metrics
• Closing Remarks
• Q&A
SLIDE 1
OUR FOCUS
• One Ford -- Acceleration
• Product Excellence -- Delivered With Passion
• Innovation -- In Every Part Of Our Business
THE PLAN
Profits
& Cash
Large
Americas
Asia Pacific
Europe,
Middle East
& Africa
+
Medium
Small
+
PROFITABLE GROWTH
FOR ALL
=
SLIDE 2
ONE FORD LONG-TERM OBJECTIVES
People Working Together As A Lean,
Global Enterprise For Automotive Leadership
Top 5
More
Top Quartile
Sales /
Balanced
Operating
Total
10%+
Regional
Margins
Shareholder
Global
& Segment
8%+
Return
Share
Profits
(TSR)
Highly
Regarded
By All
Stakeholders
Five Objectives To Deliver An Exciting, Viable Ford
Delivering Profitable Growth For All, As Well As Automotive Leadership
SLIDE 3
ONE FORD STRATEGIC FRAMEWORK
Strong
Brands
Serving
All Markets
Americas
Asia Pacific
Europe,
Middle East
& Africa
Product Excellence
Complete
Family Of
Best-In-Class
Vehicles
Ford
Smart
Mobility
Profit
=
Revenue
X
Margin
Large
Medium
PROFITABLE GROWTH
FOR ALL
Small
“Turbo Machine”
Innovation
SLIDE 4
NORTH AMERICA -- OVERVIEW
Pre-Tax Results (Bils.)
$8.1
$5.4
$6.2
• Significant transformation of Ford
North America since 2008
$8.8
$6.9
– Continuing to implement global product
strategy and launch new products that
our customers want and value
– Delivering significant improvements
in fuel economy
$(0.6)
– Driving quality improvements
– Controlling structural costs
$(5.9)
– Aligning production capacity with
demand
2008
– Generating strong cash flow to support
corporate balance sheet improvements
2009 2010 2011 2012 2013 2014
Operating Margin
(Neg.) (Neg.) 8.4% 8.3% 10.6% 10.2% 8.4%
North America Transformation Has Driven Strong Profits
In The Last Five Years
SLIDE 5
NORTH AMERICA -- KEY PRIORITIES
• Deliver profitable growth
• Accelerate quality improvements
• Develop and launch outstanding products
• Continue to revitalize the Lincoln brand
• Control costs as we grow the business
SLIDE 6
U.S. INDUSTRY SALES RATES
SAAR (Millions)
16.8
16.8
17.0 - 17.5
2013
2014
Feb. YTD
2015
2015 Full Year
Outlook
12.9
13.7
13.4
15.9
14.8
2012
Retail SAAR (Mils.)
11.7
U.S. Industry Sales Are Projected To Continue To Grow
With A 2015 Full Year Outlook Of 17 - 17.5 Million Units
SLIDE 7
U.S. INDUSTRY -- PICKUP SALES DRIVERS
Housing Starts and Full-Size Pickup Sales
Full-Size Pickup Sales (unit -- mils.)
Housing Starts (unit -- mils.)
2.3
2.0
1.9
1.8
1.7
1.6
1.4
0.9
0.8
0.9
1.0
0.6
2006
2008
2010
2012
2013
2014
Full-Size Pickup Sales Rebound Supported By Improved Housing Sector
SLIDE 8
U.S. MARKET SHARE
Total Ford / Lincoln Share (Pct.)
15.2%
2012
B / (W) Prior Year
(1.3) Pts.
15.7%
2013
0.5 Pts.
14.7%
14.6%
2014
Feb. YTD
2015
(1.0) Pts.
(0.5) Pts.
Expect Higher Market Share In 2015 Driven By New Product Introductions
SLIDE 9
NORTH AMERICA QUALITY IMPROVEMENT ACTIONS
Ford U.S. Full Year Things-Gone-Wrong
At Three Months In Service
16.4%
Better
Best
-inClass
2013MY
2014MY
Source: Global Quality Research System (GQRS)
Accelerated Quality Actions Are Driving Improvement
And Closing Gap To Best-In-Class Competition
SLIDE 10
2014 launches
2015 launches
C-MAX
Fusion
Mustang
Focus
Super Duty
F-150
Escape
Explorer
NORTH AMERICA
Transit
Expedition
Taurus
Edge
Transit Connect
Flex
Fiesta
Medium Duty
SLIDE 11
2015 FORD F-150
All-New F-150 Has Won 28 Major Truck Of The Year Awards,
Including North American Truck Of The Year (NAIAS)
SLIDE 12
2015 FORD F-150 LAUNCH STATUS
Dearborn Truck Plant
Key Data
• Full-scale vehicle production on three crews
Key Data
Kansas City Assembly Plant
• Plant changeover complete
• Production began on three crews; ramp to full production
capability during Second Quarter
• Shipments to customers started late First Quarter
The Launch Of The Most Capable F-150 Ever Is On Track
SLIDE 13
2015 FORD F-150 SALES AND MARKETING UPDATE
• Pre-launch on-line media content has accumulated over 52 million video
views from combined sources, including YouTube and Ford’s F-150
reveal website
• Demand metrics remain strong, with over 1.2 million online build and price
actions taken by consumers, and additional 410,000 requests for more
information
• 2015 MY F-150 is turning very quickly -- in February, it averaged only 18 days
on dealer lots; new model represented 21% of total F-150 retail sales in
February
• Initial mix has been rich, with a high mix of sales reflecting 4x4 drivetrain,
crew cab body style, and Lariat or even higher-spec vehicles
Strong Demand For The All-New F-150
SLIDE 14
2015 FORD EDGE
The All-New Ford Edge Began Shipping To Dealers In March
SLIDE 15
2016 FORD EXPLORER
New Ford Explorer -- Americas Best-Selling SUV Over The Past 25 Years
Available In Dealerships Later This Year
SLIDE 16
INNOVATION THROUGH PERFORMANCE
All-New
More Than
Ford 12
Explorer
New Ford
-- Americas
Performance
Best Selling
VehiclesSUV
Through
For 252020
Years
SLIDE 17
LINCOLN MOTOR COMPANY
Strategic Priorities
Distinct Brand
Opportunities Ahead
• Rapidly growing global luxury
segment with about a third of the
global industry profit pool
• U.S. and China to represent nearly
50% of global luxury sales by 2020
Unique And Compelling
Products
• Well positioned to retain Ford
customers moving to luxury segment
• Lincoln and its long heritage is well
regarded by consumers in China
Superior Client Experience
• Advantage in our size and geographic
footprint as we grow the brand
We Are Fully Committed To Re-Establishing Lincoln’s Position
Among The Top Luxury Segment Brands
SLIDE 18
LINCOLN JOURNEY
LINCOLN
DEALERSHIPS
OPEN IN CHINA
LINCOLN BRAND
LAUNCHES IN
CHINA
MKC CAMPAIGN
WITH
MATTHEW
McCONAUGHEY
MKX REVEAL
MKZ LAUNCH
BLACK LABEL
LAUNCHES
IN LOS ANGELES
LINCOLN
MOTOR
COMPANY
ANNOUNCEMENT
NAVIGATOR
LAUNCH
BLACK LABEL
REVEAL
AT PEBBLE
BEACH
2012
2013
MKC LAUNCH
LINCOLN
ANNOUNCES
REVEL
PARTNERSHIP
2014
CONTINENTAL
CONCEPT
REVEAL AT NEW
YORK AUTO
SHOW
2015
Re-Establishing Lincoln As A Top Luxury Brand
SLIDE 19
2014 launches
2015 launches
MKX
SLIDE 20
2016 LINCOLN MKX
All-New Lincoln MKX Is The Third All-New Vehicle In The
Lincoln Transformation Plan -- Available In Dealerships Later This Year
SLIDE 21
LINCOLN CONTINENTAL CONCEPT
Elegant, Effortlessly Powerful, Serene,
Lincoln Continental Concept Is The Future Of Quiet Luxury
SLIDE 22
NORTH AMERICA -- KEY TAKEAWAYS
• Industry sales growth is forecasted to continue this year
• Ford North America is focused on delivering key 2015 launches and
growing market share
• Accelerated quality actions are driving improvement and closing
the gap to best-in-class
• Strong margins projected to continue; First Quarter results reflect
impact of product launches
• Lean cost structure is key to maintaining / improving operating
efficiency
• Lincoln growth plan is on track
Continue To Focus On Driving Profitability,
Growing Market Share, And Improving Quality
SLIDE 23
SOUTH AMERICA -- OVERVIEW
Pre-Tax Results (Bils.)
• South America generated strong
pre-tax profit and operating margins
through 2011. A more challenging
macroeconomic and political
environment started in 2012
$1.2
$1.0
$0.8
$0.9
$0.2
• 2014 results reflect:
$ -*
– Weakening industry
– Exchange weakness, high
inflation, and capital controls
– Change in regional trade policies
$(1.2)
2008
2009 2010 2011 2012 2013 2014
Operating Margin
14.1% 9.7% 10.2% 7.8% 2.1% (0.3)% (13.2)%
* 2013 pre-tax results were $(33) million
• Fully transitioned to global products
in 2014
• Venezuela results no longer reported
in consolidated financials beginning
in 2015
Results For 2014 Were Lower Than 2013,
Reflecting Volatile Business Environment
SLIDE 24
SOUTH AMERICA -- BUSINESS ENVIRONMENT
• South America macroeconomic and
political challenges continue to
escalate and include:
– Recessionary to low-growth
economies
– Tough competition and excess
capacity
– High inflation
– Capital controls and limited access
to foreign reserves
– Restrictive trade policies
– Contested tax incentives
– Political and social uncertainty in
some countries
South America Faces Numerous Macroeconomic
And Political Challenges
SLIDE 25
SOUTH AMERICA -- STRATEGY
• Continue to leverage One Ford Plan throughout the business to:
– Build on improvements in quality and fuel economy
– Implement global Ford products, tailored to local market needs
– Strengthen brand to support long-term growth
– Grow revenue and market share, including trucks and expansion in
smaller markets
– Reduce costs through footprint optimization and increased
localization. Manage regulatory-related costs
– Manage country and currency risks through trade and
currency balancing
Quality, Growth, Cost Focus, And Country / Currency Risk Management
SLIDE 26
2014 Launches
2015 Launches
Focus
Mustang
Ka
Fusion
Fiesta
Explorer
Escape
Edge
EcoSport
SOUTH AMERICA
Heavy Duty
Cargo
Transit
F-250
Ranger
F-150
SLIDE 27
2015 FORD KA
All-New Ka Has Leading Fuel Economy And Brings New Technology
And Safety Features To The Emerging Consumer Class
SLIDE 28
2016 FORD FOCUS
The New Focus Maintains Class-Leading Fuel Economy And
High-End Safety And Technology Features As A Trade-Up Choice
SLIDE 29
SOUTH AMERICA -- KEY TAKEAWAYS
• Macroeconomic and political challenges continue to place pressure on the
operating margin, while industry volumes are running below last year
• South America continues to expand its product lineup and has replaced
legacy products with global One Ford offerings
• South America is focused on actions to optimize its footprint, reduce
material cost, accelerate incremental localization, and improve
structural cost
• Venezuela results removed from consolidated financials beginning in 2015,
which should result in lower volatility and profit risk going forward
• Longer term South America is viewed as an attractive business region that
will return to profitability
South America Assessing Risks And Taking Steps To Address Challenges
SLIDE 30
2015 KEY METRICS -- BUSINESS UNITS
2014 Full Year
Results
Automotive (Mils.)
North America
- Operating Margin
2015 Full Year
Outlook
$ 6,898
8.4%
Higher*
8 - 9%
South America
(1,162)
Substantially Improved*
Europe
(1,062)
Improved*
Middle East & Africa
(20)
Loss
Asia Pacific
589
Higher*
(583)
Equal To Or Higher*
Net Interest Expense
Ford Credit (Mils.)
$ 1,854
Equal To Or Higher*
* Compared with 2014
Expect Total Company Pre-Tax Profit, Excluding Special Items,
To Be $8.5 Billion To $9.5 Billion
SLIDE 31
2015 CALENDARIZATION -- TOTAL COMPANY*
Pre-Tax Profit Percent of Full Year
2015 Plan
Historical
Operating Effective Tax Rate**
2015 Plan
Full Year Rate
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
* Illustrative only, excludes special items
** Expect Full Year 2015 operating effective tax rate to be about equal to 2014 rate
Atypical Profit Calendarization Expected In 2015;
Operating Effective Tax Rate Expected To Vary During The Year
SLIDE 32
2015 PLANNING ASSUMPTIONS AND KEY METRICS
2014 Full Year
Results
Planning Assumptions (Mils.)
Industry Volume* -- U.S.
-- Europe 20
-- China
Key Metrics
Automotive (Compared with 2014):
- Revenue (Bils.)
16.8
14.6
24.0
$ 135.8
- Operating Margin**
2015 Full Year
Plan
17.0 - 17.5
14.8 - 15.3
24.5 - 26.5
Higher
3.9 %
Higher
- Operating-Related Cash Flow (Bils.)***
$
3.6
Higher
Ford Credit (Compared with 2014):
- Pre-Tax Profit (Bils.)
$
1.9
Equal To Or Higher
Total Company:
- Pre-Tax Profit (Bils.)***
$
6.3
$8.5 - $9.5
* Based, in part, on estimated vehicle registrations; includes medium and heavy trucks
* * Automotive operating margin is defined as Automotive pre-tax results, excluding special items and Other Automotive, divided
by Automotive revenue
* * * Excludes special items; see Appendix for detail and reconciliation to GAAP
Strong Growth And Financial Performance Expected For 2015;
Total Company Pre-Tax Profit To Be $8.5 Billion To $9.5 Billion
SLIDE 33
Large
Americas
Asia Pacific
Medium
Small
Europe,
Middle East
& Africa
Americas
Large
Asia Pacific
Large
Europe,
Middle East Asia Pacific
& Africa
•
Further Strengthen
Ford Brand Globally
•
Grow Lincoln Brand
•
•
Americas
Medium
Small
Medium
Small
Europe,
Middle East
& Africa
Nurture Developed
Markets; Sharply
Expand In
Emerging Markets
Leverage Parts and
Service And Ford Credit
•
Expand In Small
Vehicles And Luxury
•
Strengthen Position In
Utility Vehicles And
Trucks
•
•
•
•
•
Enhance Consumer
Experience
Lead In Connectivity
Innovate In Mobility
Evolve Autonomous
Vehicles Technology
Leverage Analytics
•
•
•
•
Deliver Scale Benefits
Optimize Footprint
Drive Cost Efficiencies
Improve Processes
SLIDE 34
QUESTIONS?
SLIDE 35
RISK FACTORS
Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ
materially from those stated, including, without limitation:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Decline in industry sales volume, particularly in the United States or Europe, due to financial crisis, recession, geopolitical events, or other factors;
Decline in Ford's market share or failure to achieve growth;
Lower-than-anticipated market acceptance of Ford's new or existing products;
Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States;
An increase in or continued volatility of fuel prices, or reduced availability of fuel;
Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
Adverse effects resulting from economic, geopolitical, or other events;
Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs,
affect liquidity, or cause production constraints or disruptions;
Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial
distress, production constraints or difficulties, or other factors);
Single-source supply of components or materials;
Labor or other constraints on Ford's ability to maintain competitive cost structure;
Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition;
Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns);
Restriction on use of tax attributes from tax law "ownership change;“
The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;
Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and / or sales restrictions;
Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;
A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-orpay" contracts);
Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments;
Inherent limitations of internal controls impacting financial statements and safeguarding of assets;
Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier;
Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades,
market volatility, market disruption, regulatory requirements, or other factors;
Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and
New or increased credit, consumer, or data protection or other regulations resulting in higher costs and / or additional financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected
that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to
update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our Annual
Report on Form 10-K for the year ended December 31, 2014, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
SLIDE 36
APPENDIX
2014 INCOME FROM CONTINUING OPERATIONS
SLIDE 381
APPENDIX
SPECIAL ITEMS
Fourth Quarter
2013
2014
(Mils.)
(Mils.)
Personnel-Related Items
Separation-related actions*
$
(156)
Full Year
2013
2014
(Mils.)
(Mils.)
$
(251)
$
$
(800)
-
$
(856)
$
(685)
$
(800)
(329)
Other Items
Venezuela accounting change
Ford Sollers equity impairment
$
-
2016 Convertible Notes settlement
-
U.S. pension lump sum program
(155)
FCTA -- subsidiary liquidation
Ford Romania consolidation loss
Total other items
Total special items
Tax special items
(126)
$
(155)
$
$
(311)
-
(126)
-
(594)
-
-
(103)
(15)
-
(926)
(712)
$ (1,255)
$ (1,177)
$ (1,568)
$ (1,940)
$ 2,080
$
$ 2,157
$
$
$ (0.25)
$
$ (0.36)
181
$
494
Memo:
Special items impact on earnings per share**
0.43
0.14
* Primarily related to separation costs for personnel at the Genk and U.K. facilities
** Includes related tax effect on special items and tax special items
SLIDE 392
APPENDIX
AUTOMOTIVE SECTOR
NET INTEREST RECONCILIATION TO GAAP
SLIDE 403
APPENDIX
AUTOMOTIVE SECTOR
GROSS CASH RECONCILIATION TO GAAP
2013
Dec. 31
(Bils.)
2014
Sep. 30
Dec. 31
(Bils.)
(Bils.)
Cash and cash equivalents
Marketable securities
Total cash and marketable securities (GAAP)
$
$
$ 25.1
$ 22.9
$ 21.7
Securities in transit*
Gross cash
(0.3)
$ 24.8
(0.1)
$ 22.8
$ 21.7
5.0
20.1
6.0
16.9
$
4.6
17.1
* The purchase or sale of m arketable securities for w hich the cash settlem ent w as not m ade by period end and the related payable or
receivable rem ained on the balance sheet
SLIDE 414
APPENDIX
AUTOMOTIVE SECTOR
OPERATING-RELATED CASH FLOWS
RECONCILIATION TO GAAP
SLIDE 425
APPENDIX