F Ford Motor Company

By Christina Rogers and Gautham Nagesh 

Ford Motor Co. swung to a $1.9 billion fourth quarter net profit, capping a record year for operating results at the nation's No. 2 auto maker and prompting its executives to forecast a repeat or improved performance this year.

But investor concerns Ford won't wring better margins from U.S. sales this year sent its shares to their lowest point in more than three years during the day. The stock retraced some of its drop and finished down 1% at $11.71, the lowest closing price since Mark Fields took over as chief executive 18 months ago.

Ford's fourth-quarter operating profit of 58 cents a share, compared with 28 cents a share a year earlier, outpaced analyst expectations. And the company reported a $259 million annual profit in Europe, its first in four years due to restructuring efforts, improved market conditions and accounting changes. Its Asia business is showing life after years of sluggish results as well, booking a $765 million annual operating profit amid momentum in China.

Brian Johnson, a Barclays auto analyst, said investors believe the U.S. new-car market, which reached a record 17.5 million sales in 2015, has peaked after six years of uninterrupted growth.

"Investors have made up their minds for this cycle...we don't find many institutions who have driven a Ford lately," Mr. Johnson said.

Ford's 8.2% North American operating margin in the fourth quarter--lower than the more than 12% margin in its third quarter--missed analysts' expectations. Still, Ford Chief Financial Officer Bob Shanks forecast equal or better operating profit in 2016, but said North American profits are already at "benchmark levels."

Ford, which is looking to boost output, has benefited from low gasoline prices, which primed demand for sport utilities, such as the Explorer, and the company's highly profitable F-150 pickup truck. The auto maker is preparing to offer a new aluminum version of its "Super Duty" F-Series this year, but said launch costs will weigh on profit margins.

AutoNation Inc. Chief Executive Mike Jackson said domestic car makers, including Ford, should do well this year even if overall sales flatten.

"America's gone truck crazy," he said, noting more than 70% of the Detroit Three's U.S. sales are the more profitable light trucks, compared with less than 50% light trucks for the Japanese auto makers. "The domestics are in a fantastic position...they are going to move heaven and earth to build more trucks."

Mr. Shanks, however, sought to broaden the view on Ford beyond its home turf. "This isn't just a North American story," he said. "We really started to see international markets come forward and that is a big opportunity."

Global demand, however, has not been as bright as North America lately. Growth slowed last year in China, the world's largest light-vehicle market, and although optimistic about Ford's continued growth prospects, Mr. Shanks said economic shifts and stock market volatility could make for bumps along the way.

Although sales are booming in Europe, the company posted a 1% operating margin for the year. Brazil and Russia, two key markets for Ford, are mired in sales slumps. Ford lost $295 million in South America in the fourth quarter and $832 million during the year, nearly offsetting the $1 billion combined in Europe and Asia last year.

Ford's pre-tax profit for 2015 equaled a record $10.8 billion, a 48% increase from the prior year partially due to a move to mark-to-market accounting, which changes the way pension losses and gains are recognized.

Almost all of that profit was generated by Ford's North America operations, which posted a $2 billion profit in the final three months of the year and a $9.3 billion profit for the full year.

Revenue for its fourth quarter rose 12% to $40.3 billion, as sales increased in three of the company's five global regions. Ford will pay out a record $9,300 per worker in profit-sharing bonuses in March to factory employees represented by the United Auto Workers union.

Corrections & Amplifications

Ford's operating profit in Asia, including China, was $765 million last year. An earlier version of this article incorrectly said it was $444 million. (Jan. 28, 2016)

Write to Christina Rogers at christina.rogers@wsj.com and Gautham Nagesh at gautham.nagesh@wsj.com

(END) Dow Jones Newswires

January 28, 2016 19:02 ET (00:02 GMT)

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