By Nadia Damouni
NEW YORK (Reuters) - Ford Motor Co
The Detroit-area company said its mid-decade target for a global automotive profit margin of 8 percent to 9 percent was also at risk.
Ford expects a global pretax profit next year of between $7 billion and $8 billion. That's lower than an expected $8.5 billion expected in 2013, which is set to be one of the most profitable in the company's 110-year history, Ford said. Much of that amount - about $8.34 billion - is estimated to come from North America.
Ford investors were caught off-guard by the profit outlook.
"I had thought that Ford was humming along just fine," said Gary Bradshaw, portfolio manager with Dallas-based Hodges Capital Management, which owns Ford shares. "Autos have been a bright spot in the economy. I'm a little bit surprised."
Buckingham Research analyst Joseph Amaturo said he expected investors to "aggressively rotate out of Ford and into General Motors Co
He maintained an "underperform" rating on Ford shares.
A major expense next year for Ford will be a record 23 global product launches, which, Shanks said, showed a commitment to future expansion and preparation for "profitable growth."
Product launches will have more of an impact in the second half of 2014 than in the first half, Shanks said.
Ford's 2014 profit was set to drop "due to deterioration in North America pricing and lower F-Series production," Amaturo said.
The Ford F-Series pickup truck - the most profitable vehicle in the automaker's lineup - is sold in North America, where it has been the industry's top-seller for more than three decades.
A new version of the F-Series is to debut next fall, and there is concern among some analysts that inventory will be constrained during its launch.
Shanks said that in South America, Ford is expected to show breakeven results in 2014 as in 2013. Improvements in Brazil and other areas will be outweighed by difficulties in Venezuela.
He said Ford expects the U.S. dollar to drop to 12 bolivars from the current 6.3 bolivars, "with an unfavorable profit effect of about $350 million."
The ruling Socialist Party in Venezuela controls the currency exchange rate. Shanks said Ford expects a devaluation of the Venezuelan bolivar - as occurred in early 2013 - to take place in early 2014.
There is also concern that Venezuela may expand its price-setting policies to include new vehicles, as it has done for auto parts sold to dealers. The prices the government set for auto parts were below normal profit margins, Shanks said.
In Europe, Ford expects the overall market to begin improving. Once it gets beyond its restructuring expenses of $400 million in both 2013 and 2014, the company expects to be profitable in the continent, which has been a damper on its earnings over the past several years.
"We fully expect to be profitable in Europe in 2015," said Ford Chief Financial Officer Bob Shanks, who gave the end-of-year presentation in New York.
Ford shares were down $1.16, or 7 percent, at $15.54, in afternoon trading on the New York Stock Exchange.
(Additional reporting by Bernie Woodall in Detroit; Editing by Bernadette Baum)