Ford plans more SUVs, fewer cars, aims to pay billions to shareholders

A U.S. flag flies near a Ford Motor Co. logo at Rod Baker Ford dealership in Plainfield, Illinois, U.S., on Wednesday, July 23, 2014. Ford Motor Co.'s surprisingly strong second quarter profit may be as good as it gets this year for the automaker as it ramps up spending to introduce 23 new models worldwide and restructure its European operations.
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More SUVs, fewer cars.

That's part of the message Ford delivered to an industry conference as it continues trying to recast its image under CEO Jim Hackett. That message included good news for shareholders, who could be in line for more than $3 billion in dividends this year.

The company plans to "shift toward a lower-volume passenger car lineup in North America and Europe" while it boosts its SUV mix with vehicles like the Edge ST and upcoming Bronco. Part of that shift will be a focus on "authentic" off-road vehicles, officials said.

Ford and other automakers have been upping SUV and truck production to address a shift away from passenger cars in the U.S.

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The company, as part of a presentation for the 2018 Deutsche Bank Global Auto Industry Conference in Detroit Tuesday evening, said it would increase its SUV mix by 10 percentage points and shrink its car portfolio proportionally.

“We are actively evolving our position to be more competitive,” Jim Farley, executive vice president and president of global markets, said in a news release. “At the highest level, we need to narrow our full lineup of nameplates to a more focused lineup that delivers stronger growth, less risk and better returns.”

The company also offered clarity to Hackett's message to Wall Street in October that the company would reduce its number of models. In this case, the company plans to cut the number of combinations on Escape, Fusion and EcoSport from thousands to as few 10 for each vehicles to reduce costs.

The news comes two days after the Dearborn automaker announced at the North American International Auto Show in Detroit that it would increase its cumulative investment in vehicle electrification to $11 billion from 2015-22. The company says it will have 40 electrified vehicles, including 16 full battery electric vehicles, by 2022.

“Our strategy in electrification has shifted. We're not thinking about electric vehicles from a compliance perspective,” Farley said. "We're targeting high-margin segments.”

The Dearborn automaker is trying to deal with a shifting automotive industry that is feeling pressured to show progress, especially in China and Europe, on expanding its electric vehicle offerings.

Federal tax legislation signed last year was referenced during the presentation with Farley and Bob Shanks, Ford executive vice president and chief financial officer, but there was no mention of employee bonuses. Fiat Chrysler Automobiles last week partially credited the legislation with a decision to pay $2,000 bonuses to U.S. workers and invest $1 billion in the Warren Truck Plant. General Motors does not plan to pay bonuses related to the tax reform.

Repatriating foreign earnings, one of the stated goals of the legislation, will apparently be minimal for Ford. Shanks noted that "90% of our cash" is already in the United States.

Poor performance in South America was also a topic, with a commitment to make changes. Farley said “we are exploring every option that you can imagine.”

As part of the presentation, the company said preliminary results for 2017 show it with earnings per share of $1.95 and adjusted earnings per share of $1.78, which it said is in line with recent guidance. It expects adjusted earnings per share for 2018 of $1.45 to $1.70, noting the effects of higher commodity costs and adverse exchange rates.

The company also announced a first quarter regular dividend of 28 cents per share. Ford expects to make distributions of $3.1 billion in 2018, subject to board approval, bringing the total to $18 billion since the company restored a regular dividend in 2012.

The company plans to announce its fourth-quarter and full year 2017 earnings on Jan. 24. The company said it "anticipates ending the year with a strong balance sheet with automotive cash of $26.5 billion and automotive liquidity of nearly $37 billion."

Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence