Ford Motor (F) Q2 2017 Earnings Call Notes

James P. Hackett – Ford Motor Co.

They are reassessing regions they operate in and their capital allocation to these areas

“the new reality that I can kind of confirm to you is that we really have to ask ourselves what do we have to believe to get to the kind of returns that we expect and you expect. And if we can’t answer that, then we can’t be there. That’s making the choice when you hear us talk about playing to win and where to play, that is what that code means, is that you are clarifying where you’re going to put capital.”

Robert L. Shanks – Ford Motor Co.

Bad times in Europe with Brexit playing a mjaor role

“in Europe, all the key metrics are lower…The revenue is down largely because of the volume…we were down about $380 million. Almost literally half of that is related across a number of these factors due to Brexit. The biggest impact is exchange, so a much bigger effect than actually what’s shown in the singular bar there, directly related to Brexit. We also saw the industry decline, which is buried within the – in fact the industry – as I mentioned to you, the industry was up, but you can see the industry dollars is down. That’s the effect of the UK, because it’s a high margin market.”

Expecting imporvements in Middle East and Africa

“we still continue to expect the Middle East and Africa to improve this year compared to 2016 due to lower cost, favorable exchange and lower volume. And a lot of that – in fact, all of that improvement is going to take place in the second half of the year. So, I expect to see better results on a year-over-year basis in the second half of the year than what we’ve seen in the first half.”

They expect a soft gradual decline in auto sales

“Our view is that what, however, you wanted to describe it, an eroding plateau, I’ve seen that, or however you want to characterize it, very strong sales, we don’t see anything in terms of the economy, the health of the consumer, housing, oil, the oil production is back up and that’s had an impact on trucks for example, that would suggest that over the next two – let’s say two years, that there’s any kind of significant collapse or dramatic change. We do think it’s going to decline. We think it will be a soft gradual decline.”