Increased costs due to factors, including those related to the outcome of the U.S. elections as well as those related to the challenges of self-driving cars are likely to push up Ford Motor’s costs in 2017. GM, however, has provided a much rosier picture for 2017. Both companies see 2018 to be more profitable than 2017.
In an interesting development, although General Motors has provided an upbeat forecast for 2017, that beast Wall Street expectations, Ford Motor Co has confirmed that 2017 may not be as profitable as the previous year.
However, Ford Motor, the second largest automobile manufacturer in the United States, said, it was on track to meet its $10.2 billion, in adjusted profit in 2016, that it had forecast earlier.
While GM’s shares rose by 3.7% to $37.35, Ford’s share initially perked up by 0.5% in extended trading before they traded flat and closed at $12.85.
Ford expects its profits to improve in 2018. The company expects 2017 to be a year of increased expenses since it is likely that it would be splurging on “emerging opportunities”, which includes rise in costs and self-driving vehicles.
Last week, Ford had stated that it was on course to deliver a “high-volume, fully autonomous vehicle for ride sharing in 2021” as well as a fully electric small SUV with a range of at least 300 miles on a full charge.
During a webcast in a call to Wall Street analysts, Ford’s CEO, Mark Fields, said the adjusted operating effective tax rate in 2016 is likely to hover around 32%.
Bob Shanks, Ford’s CFO, said that 32% is higher than the 28.5% the company had expected, a few months back. Further, for 2017, Ford had expected an adjusted operating tax rate of 30% against an existing 32%.
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