DEUTSCHE BANK GLOBAL AUTOMOTIVE CONFERENCE. Mark Fields President and CEO. January 12, 2016

Transcription

1 DEUTSCHE BANK GLOBAL AUTOMOTIVE CONFERENCE Mark Fields President and CEO January 12, 2016

2 CREATING VALUE GROWTH RETURNS! RISK REWARDS The Drivers Of Value SLIDE 2

3 2015 A BREAKTHROUGH YEAR GROWTH V O L U M E Wholesale volume highest since 2005 R E V E N U E Automotive revenue highest since 2007 G L O B A L M A R K E T S H A R E Ford global market share estimated at 7.3%, up 0.2 percentage points F O R D C R E D I T Managed receivables grew 13% from 2014 reflecting our Automotive growth and higher Ford Credit share of financing Wholesale Volume, Revenue, And Global Market Share Increased In 2015 SLIDE 3

4 2015 A BREAKTHROUGH YEAR RETURNS C O M P A N Y P R E - T A X P R O F I T ( E x c l. S p e c i a l I t e m s ) All-time record A U T O M O T I V E O P E R A T I N G M A R G I N Highest since at least the 1990s A U T O M O T I V E O P E R A T I N G C A S H F L O W Best since at least 2001 C O R P O R A T E A F T E R - T A X R O I C Higher than cost of capital and improved year-over-year Record Financial Performance In 2015 SLIDE 4

5 2015 A BREAKTHROUGH YEAR RISK R E G I O N A L P R O F I T A B I L I T Y All business units profitable except South America Returned Europe to profitability B R E A K E V E N Automotive Healthy about 80% of wholesale volume North America On target about 2/3 of wholesale volume C A S H A N D L I Q U I D I T Y More than $23 billion cash and $34 billion of liquidity B A L A N C E S H E E T Leverage Consistent with single-a rating Global funded pensions Nearly fully funded and de-risked F O R D C R E D I T Robust asset performance and liquidity; return on equity > 10% Managed leverage temporarily higher than 8 to 9 to 1 target Company Risk Profile Improved SLIDE 5

6 2015 A BREAKTHROUGH YEAR REWARDS 2015 shareholder distributions: $2.5 billion 20% increase in regular dividend C u s t o m e r s E m p l o y e e s D e a l e r s S u p p l i e r s Increased Regular Dividend; Profitable Growth For All SLIDE 6

7 2015 A BREAKTHROUGH YEAR OPERATING 10 New Plants Record Sales in China, More Than 1.1 Million Vehicles Sold #1 Successfully launched 16 global products Opened last of 10 new plants to support growth in Asia Pacific Quality and customer satisfaction to bestever levels in all regions Ford Credit recognized as No. 1 in J.D. Power customer satisfaction $4.5 Billion Achieved four-year agreement with UAW Investing $4.5 billion in electrified vehicles by 2020 New SYNC milestone: more than 15 million vehicles with SYNC Announced Ford Smart Mobility Plan SLIDE 7

8 LOOKING AHEAD TO 2016 OUR FOCUS One Ford Acceleration Product Excellence Delivered with Passion THE PLAN Innovation In Every Part of Our Business Asia Americas Pacific Europe, Middle East & Africa + Large Medium Small + = Profits & Cash PROFITABLE GROWTH FOR ALL SLIDE 8

9 ONE FOOT IN TODAY, ONE FOOT IN TOMORROW GROWTH RETURNS! RISK REWARDS Strengthening Today s Business; Preparing For New Opportunities SLIDE 9

10 KEEPING OUR CORE AUTOMOTIVE BUSINESS STRONG Building Our Future On A Strong Foundation SLIDE 10

11 AUTOMOTIVE INDUSTRY TRENDS Disruptive Impact On Business New Mobility New Retail Shift To Asia Digital Experience Start-Up OEMs Non-Traditional Entrants Alternative Fuels Electrification Connectivity Big Data / Analytics Light-Weighting Automated Driving Low-Cost Brands Driver Assist Disruptive Technology Change Our Industry Is Rapidly Evolving We Plan To Be A Leader Source: Roland Berger Strategy Consultants SLIDE 11

12 FROM MAKING VEHICLES TO PROVIDING TRANSPORTATION $5.4 Trillion $2.3 Trillion Ford Share 6% Ford Share 0% Traditional Auto Revenue Other Transportation Services Revenue Transportation As A Service Represents A Significant Opportunity SLIDE 12

13 FORD SMART MOBILITY Changing The Way The World Moves To Make People s Lives Better SLIDE 13

14 MAKING PEOPLE S LIVES BETTER Working Both Our Core Business And Emerging Opportunities To Build An Even Stronger Future SLIDE 14

15 FORD SMART MOBILITY INITIATIVES SYNC Connect Apple Car Play, Android Auto AppLink expansion SmartDeviceLink partners Ford Credit Link GoDrive car sharing Multi-modal mobility solutions Techstars Mobility challenge Tripling Autonomous fleet Added testing (M-City, CA) Velodyne collaboration Snow testing FordPass Amazon Echo Lincoln Miles IBM partnership Pivotal partnership Bringing New, Emerging Opportunities To Life SLIDE 15

16 2016 BUSINESS ENVIRONMENT Industry (Mils) GDP (Pct) 2015* * 2016 Global % % U.S % % Brazil (3.6)% (2.0) (3.0)% Europe % % China % % * 2015 data estimated; China reflects retail External Conditions Broadly Supportive Of Continued Growth In Global Industry Sales SLIDE 16

17 2016 PRODUCT LAUNCHES 12 F o c u s R S F o c u s E l e c t r i c F u s i o n / M o n d e o 4 - d o o r H y b r i d E n e r g i Global Product Launches in 2016 E s c a p e S u p e r D u t y R a p t o r G T L i n c o l n M K Z g a s H y b r i d L i n c o l n C o n t i n e n t a l SLIDE 17

18 2016 COMPANY KEY METRICS 2016 FY Plan Automotive Revenue Equal To or Higher Than 2015 Operating Margin* Equal To or Higher Than 2015 Operating-Related Cash Flow* Strong, but Lower Than 2015 Total Company Pre-Tax Profit* Equal To or Higher Than 2015 Tax Rate (Pct) Low 30s Operating EPS* Equal To or Higher Than 2015 * Excludes special items Sustaining Strong Financial Results In 2016 SLIDE 18

19 DRIVERS OF 2016 AUTOMOTIVE OPERATING MARGIN Margin Impact Volume And Mix Pricing Cost Parts And Service Overall Assessment Equal To or Higher Than 2015 Growing Lean Favorable Market Factors And Continued Investment For Profitable Growth SLIDE 19

20 2016 BUSINESS UNIT PRE-TAX RESULTS 2016 FY Plan Automotive North America About Equal To 2015» Operating Margin (Pct) 9.5% or Higher South America Greater Loss Than 2015 Europe Higher Than 2015 Middle East & Africa Equal To or Higher Than 2015 Asia Pacific Higher Than 2015 Other Automotive Loss of About $800 Million Ford Credit Equal To or Higher Than 2015 All Regions Profitable, Except South America; Sustaining Strong Performance In North America SLIDE 20

21 FORD RETURN ON INVESTED CAPITAL 25% Five-Year Average ROIC* (Pct.) 11% 16% 0% (6)% * Based on Ford ROIC methodology ROIC Healthy And Higher Than Cost Of Capital In Majority Of Last Twenty Years SLIDE 21

22 FORD AND COMPETITORS RETURN ON INVESTED CAPITAL Five-Year Average ROIC* (Pct.) 16% 9% 4% (1)% Ford VW BMW Toyota Fiat Group / FCA GM (5)% * Based on Ford ROIC methodology. For Fiat Group and GM, cumulative ROIC since 2009 reflecting post-bankruptcy results; for Fiat Group, consolidated Chrysler results effective June Ford ROIC Compares Favorably To Industry Peers, Reflecting Relative Capital Efficiency SLIDE 22

23 2016 FORD RISK PROFILE R E G I O N A L P R O F I T A B I L I T Y All regions profitable except South America; Europe profitability to improve B A L A N C E S H E E T Leverage Consistent with Single-A rating Global funded pensions Fully funded B R E A K E V E N Automotive Healthy North America At target F O R D C R E D I T Robust asset performance and liquidity; ROE and managed leverage at target C A S H A N D L I Q U I D I T Y At or higher than target levels F O R D S M A R T M O B I L I T Y Concrete and meaningful progress Continuing To Improve Ford Risk Profile In 2016 SLIDE 23

24 CAPITAL ALLOCATION FRAMEWORK Investment Grade Balance Sheet Fund The Plan Strong Ford Credit Shareholder Distribution Strategy Cash and Liquidity Leverage Framework Fund and De-Risk Pensions Renew Products Profitable Growth Smart Mobility Restructuring Infrastructure Support Sale of Ford Vehicles Globally Target Return on Equity Optimize Capital Deployment Sustainable Regular Dividend Eliminate Ongoing Dilution Supplemental Dividend Framework To Deploy Capital Successfully Implemented; Now Moving To Next Stage Of Shareholder Distribution Strategy SLIDE 24

25 SHAREHOLDER DISTRIBUTIONS Dividends Regular dividend Sustainable through a business cycle Target top quartile auto yield Shareholder Distributions (Bils.) Supplemental Dividend $12.6 Anti-Dilutive Share Repurchases $1.0 Regular Dividends $2.5 Supplemental cash dividend Provides cash beyond regular dividend May vary by year Equal benefit to all shareholders; recognizes large retail ownership $6.6 $2.3 $4.3 $3.5 $2.5 $1.0 $2.4 $2.4 $ * * Assumes 2016 regular dividend of $0.15 per share per quarter * Declaring First Quarter Regular And $1 Billion Supplemental Cash Dividends; Plan 2016 Shareholder Distributions Of $3.5 Billion, Up About 40% From 2015 SLIDE 25

26 WRAP-UP Delivered six consecutive years of strong performance, including a breakthrough year in 2015, transforming Ford For 2016, continuing our journey with another outstanding year as we work toward automotive and mobility leadership in the years ahead Driving Toward Automotive And Mobility Leadership SLIDE 26

27 DEUTSCHE BANK GLOBAL AUTOMOTIVE CONFERENCE

28 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 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, Europe, or China 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-or-pay" 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 subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. SLIDE 28

29 APPENDIX

30 PENSION AND OPEB UPDATE APPENDIX INDEX Item Appendix 2015 Planning Assumptions and Key Metrics 1 Return on Invested Capital Methodology 2 Return on Invested Capital Calculations (Ford and Competitors) 3-8

31 2015 PLANNING ASSUMPTIONS AND KEY METRICS 2014 FY 2015 FY Outlook Results* Prior Updated* Planning Assumptions (Mils) Industry Volume - U.S About Europe About China 24.0 About 24.0 Key Metrics Automotive: - Revenue (Bils) $ Higher** - Operating Margin*** 4.6 % 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)*** $ 7.3 $8.5 - $9.5 $ $11.0 * After Pension / OPEB revision announced on January 7, 2016; see materials on Ford s Investor Relations website for details ** Compared with 2014 *** Excludes special items APPENDIX 1

32 RETURN ON INVESTED CAPITAL METHODOLOGY Approach Reflects an all-in after-tax measure providing a true return on total capital employed Based on publicly available financial disclosures and developed in collaboration with outside advisors Operating Return (NOPAT) GAAP income before taxes Excludes costs associated with funding capital structure (i.e., cost of capital) Automotive debt interest expense Funding-related pension and OPEB costs Less Cash Taxes (deferred tax assets inherent in invested capital) Invested Capital Average year balance sheet equity, Automotive debt and net unfunded pension and OPEB obligations APPENDIX 2

33 FORD RETURN ON INVESTED CAPITAL CALCULATION Net Operating Profit After Tax (NOPAT) (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) Pre-Tax Profit (Incl. Special Items) $ 7.1 $ 3.7 $ 2.0 $ 14.4 $ 1.2 Add Back: Costs Related to Invested Capital Automotive Interest Expense Funding-Related Pension and OPEB Costs* (0.2) (6.1) 3.4 Less: Cash Taxes (0.1) (0.3) (0.3) (0.5) (0.5) Net Operating Profit After Tax $ 8.6 $ 9.4 $ 8.6 $ 8.6 $ 5.0 Invested Capital Equity $ (1.0) $ 14.9 $ 15.9 $ 26.2 $ 24.5 Redeemable Non-Controlling Interest Automotive Debt Net Pension and OPEB Liability Invested Capital (End of Year) $ 36.0 $ 50.0 $ 56.0 $ 57.0 $ 54.8 Average Year Invested Capital $ 40.1 $ 43.2 $ 53.1 $ 56.5 $ 55.7 Annual ROIC 21.5% 21.7% 16.2% 15.2% 8.9% Five-Year Average ROIC** (5.0)% 3.0% 7.3% 17.4% 16.2% * Reflects total pension & OPEB (income) / expense except service cost ** Calculated as five-year average NOPAT divided by five-year average invested capital Note: Totals may not foot due to rounding APPENDIX 3

34 BMW RETURN ON INVESTED CAPITAL CALCULATION Net Operating Profit After Tax (NOPAT) (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) Pre-Tax Profit (Incl. Special Items) Add Back: Costs Related to Invested Capital Interest Expense Funding-Related Pension and OPEB Costs* Less: Cash Taxes (1.3) (2.7) (2.5) (2.8) (4.3) Expense in Lieu of Amortization of Development Costs** (0.7) (0.4) Net Operating Profit After Tax Invested Capital Equity Less: Capitalized Development Assets** (4.6) (4.4) (4.3) (5.0) (5.5) Automotive Financial Liabilities Net Pension and OPEB Liability Invested Capital (End of Year) Average Year Invested Capital Annual ROIC 18.2% 20.6% 18.5% 14.2% 11.5% Five-Year Average ROIC*** 10.1% 11.4% 12.7% 15.1% 16.1% * Reflects total pension & OPEB (income) / expense except service cost ** Elimination of development cost capitalization effects from IFRS reporting *** Calculated as five-year average NOPAT divided by five-year average invested capital Note: Totals may not foot due to rounding Source: BMW Group Annual Reports APPENDIX 4

35 FCA RETURN ON INVESTED CAPITAL CALCULATION* Net Operating Profit After Tax (NOPAT) (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) Pre-Tax Profit (Incl. Special Items) Add Back: Costs Related to Invested Capital Interest Expense Funding-Related Pension and OPEB Costs** 0.0 (0.1) Less: Cash Taxes (0.7) (0.5) (0.5) (0.4) (0.5) Expense in Lieu of Amortization of Development Costs*** (0.5) (0.8) (1.5) (1.2) (1.2) Net Operating Profit After Tax Invested Capital Equity Less: Capitalized Development Assets*** (2.9) (3.5) (4.9) (5.7) (7.1) Automotive Debt Net Pension and OPEB Liability Invested Capital (End of Year) Average Year Invested Capital Annual ROIC 1.7% 6.0% 4.9% 3.9% 3.9% Cumulative Average ROIC (since 2009)**** 1.7% 4.0% 4.3% 4.2% 4.1% * Fiat Group consolidated Chrysler results effective June 2011 ** Reflects total pension & OPEB (income) / expense except service cost *** Elimination of development cost capitalization effects from IFRS reporting **** Calculated as average NOPAT since 2009 divided by average invested capital since 2009 Note: Totals may not foot due to rounding Source: Fiat Group / FCA Annual Reports APPENDIX 5

36 GM RETURN ON INVESTED CAPITAL CALCULATION Net Operating Profit After Tax (NOPAT) (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) Pre-Tax Profit (Incl. Special Items) $ 7.2 $ 9.2 $ (28.7) $ 7.5 $ 4.2 Add Back: Costs Related to Invested Capital Automotive Interest Expense Funding-Related Pension and OPEB Costs* (0.6) (1.9) 2.2 (0.2) (0.4) Less: Cash Taxes (0.4) (0.6) (0.6) (0.7) (0.9) Net Operating Profit After Tax $ 7.3 $ 7.3 $ (26.6) $ 6.8 $ 3.3 Invested Capital Equity $ 37.2 $ 39.0 $ 37.0 $ 43.2 $ 36.0 Automotive Debt Net Pension and OPEB Liability Invested Capital (End of Year) $ 74.0 $ 77.0 $ 77.8 $ 76.5 $ 76.2 Average Year Invested Capital $ 77.8 $ 75.5 $ 77.4 $ 77.1 $ 76.4 Annual ROIC 9.4% 9.7% (34.4)% 8.9% 4.4% Cumulative Average ROIC (since 2009)** 9.4% 9.5% (5.2)% (1.7)% (0.5)% * Reflects total pension & OPEB (income) / expense except service cost ** Calculated as average NOPAT since 2009 divided by average invested capital since 2009 Note: Totals may not foot due to rounding Source: GM 10-K Filings APPENDIX 6

37 TOYOTA RETURN ON INVESTED CAPITAL CALCULATION* Net Operating Profit After Tax (NOPAT) (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) Pre-Tax Profit** (Incl. Special Items) ,635 2,759 3,201 Add Back: Costs Related to Invested Capital Interest Expense Funding-Related Pension and OPEB Costs*** (6) Less: Cash Taxes (211) (282) (331) (411) (1,146) Net Operating Profit After Tax ,346 2,376 2,072 Invested Capital Equity 10,920 11,066 12,773 15,219 17,647 Automotive Debt 1,562 1,558 1,284 1,246 1,249 Net Pension and OPEB Liability Invested Capital (End of Year) 13,028 13,301 14,715 17,002 19,433 Average Year Invested Capital 13,233 13,164 14,008 15,858 18,218 Annual ROIC 4.5% 3.0% 9.6% 15.0% 11.4% Five-Year Average ROIC**** 5.7% 3.6% 2.8% 7.7% 9.1% * Reflects fiscal year (April 1 of noted year through March 31 of following year) ** Includes equity earnings reported after income before income taxes *** Reflects total pension & OPEB (income) / expense except service cost **** Calculated as five-year average NOPAT divided by five-year average invested capital Note: Totals may not foot due to rounding Source: Toyota 20-F Filings APPENDIX 7

38 VW RETURN ON INVESTED CAPITAL CALCULATION Net Operating Profit After Tax (NOPAT) (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) Pre-Tax Profit (Incl. Special Items) Add Back: Costs Related to Invested Capital Interest Expense Funding-Related Pension and OPEB Costs* Less: Cash Taxes (1.6) (3.3) (5.1) (3.1) (4.0) Expense in Lieu of Amortization of Development Costs** (0.1) (0.2) (0.7) (1.6) (1.7) Net Operating Profit After Tax Invested Capital Equity Less: Capitalized Development Assets** (7.7) (9.9) (12.9) (14.2) (15.7) Automotive Financial Liabilities Net Pension and OPEB Liability Invested Capital (End of Year) Average Year Invested Capital Annual ROIC 15.8% 25.3% 24.3% 9.3% 10.2% Five-Year Average ROIC*** 11.0% 15.5% 17.9% 16.1% 16.0% * Reflects total pension & OPEB (income) / expense except service cost ** Elimination of development cost capitalization effects from IFRS reporting *** Calculated as five-year average NOPAT divided by five-year average invested capital Note: Totals may not foot due to rounding Source: VW Group Annual Reports APPENDIX 8