Ford Warns of $11 Billion Restructuring Taking Up to Five Years

Ford Motor Co. warned investors it’s embarking on a costly restructuring that will take years and punctuated an ugly day for Detroit’s big carmakers, with all three cutting their 2018 profit forecasts. The shares fell in late trading.

The second-largest U.S. automaker expects to rack up $11 billion in charges over the next three to five years, as it’ll exit businesses beyond the North Americansedan market. A stale product lineup in Asia and inefficiencies in Europe contributed to both regions swinging to losses in the second quarter. The struggles Ford is having with those operations spurred its decision to slash projections for earnings this year.

Ford joinedGeneral Motors Co. andFiat Chrysler Automobiles NV inlowering forecasts for the year, making Wednesday arguably the worst day Detroit has seen since the depths of the global financial crisis that sent two of the region’s traditional car-making giants into bankruptcy. Ford vowed to cut deep as it confronts an uncertain future in which U.S. PresidentDonald Trump is considering tariffs onimported autos and parts, on top of steel and aluminum levies that have already driven up costs.

“The team is making the hard decisions to raise the returns of underperforming assets where we can,” Chief Financial Officer Bob Shanks said in a statement. “We will disposition the rest. This type of profound redesign will take time, and we will communicate as decisions are made.”

Ford now expects adjusted earnings will drop to as low as $1.30 a share, down from an earlier projection for as much as $1.70. The Dearborn, Michigan-based company’s Asia Pacific and Europe operations lost a combined $467 million in the second quarter. A year earlier, the automaker was profitable in both regions.

The shares fell as much as 3.8 percent as of 4:15 p.m. in New York, after regular trading. Ford had dropped 16 percent this year as of Wednesday’s close.

Chief Executive Officer Jim Hackett shocked the auto industry — and many ofFord’s dealers — when he announced plans in April to abandon the shrinking North American sedan market and go all-in on higher-profit sport utility vehicles and pickups.

Ford is now signaling it’s going to proceed more deliberately with drastic restructuring moves. It’s rescheduling an investor meeting that had been planned for September to when it can share more specifics about its plans.

— With assistance by Keith Naughton

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