Our financial results tell a story of a company that is growing and improving its fiscal health. For the full year, our pre-tax operating profit of $8.6 billion (excluding special items) was among the best in our history and Automotive operating-related cash flow hit a record, since at least 2001. These full-year results reflect an Automotive sector operating profit that was the highest in more than a decade, with record profits in North America and Asia Pacific Africa since at least 2000, about break even results in South America, and a loss in Europe – but a lower loss than the prior year. Ford Credit was solidly profitable.
In 2014, we are continuing to invest to create innovative products such as the all-new F-150 to ensure Ford has the freshest and most attractive product line-up in the industry. At the same time, we are also investing to expand our portfolio into new markets, as well as adding capacity, where appropriate, to satisfy increasing demand. As a result, 2014 will be a solid year for the company and a critical next step forward in implementing our One Ford plan to continue delivering profitable growth for all.
Meanwhile, our global product process is saving us money while enabling faster development of new vehicles and more efficient delivery of new technologies in our core markets. Significant progress has been made and continues on our commitment to consolidate platforms. In 2007, we utilized 27 different vehicle platforms. We now have 15 total platforms and are on track to meet our target of nine global core platforms. We are able to reinvest the savings of this platform consolidation back into product development, introducing more products at a faster product cadence – and better profitability.
For the fourth straight year, Ford was the best-selling brand in America. According to R. L. Polk data, the Focus was the No. 1 selling vehicle nameplate in the world in 2013, thanks to its continued strength in Europe and a rapidly expanding Asian market. And, we continued to sell the world’s top-selling pickup truck – the F-Series, which has seen significant improvements in fuel efficiency. In early 2014, we unveiled the re-invented 2015 F-150 pickup with a high-strength steel frame and aluminum-alloy body.
Today, we are equally known for our competitive products in all segments of the market, including small and midsize cars as well as sport utility vehicles and our top-selling pickup trucks. For each of our new or significantly refreshed vehicles, we continue to offer a powertrain with leading fuel economy. And, we’re offering customers choices of the fuel-efficient systems that work best for them – from EcoBoost®-powered gasoline vehicles to hybrids to electrified vehicles. More than 90 percent of Ford’s North American lineup is available with an EcoBoost® engine.
After receiving investment grade ratings from Moody’s and Fitch in 2012, we received our Ford Blue Oval back. It had been put up as collateral in 2006 to secure an $18.5 billion credit agreement.
Four of the major credit rating agencies, including Standard & Poor’s, now rate us as investment grade.
In another sign of our financial progress, and consistent with our plan to provide regular growing dividends that are sustainable over an economic or business cycle, we doubled our quarterly stock dividend in 2013 and announced an additional 25 percent increase in early 2014. We had reinstated the dividend in 2012 after suspending it in 2006. The dividend is an important component of our vision of profitable growth for all – customers, employees, dealers, suppliers, investors and communities.
Also as a result of our strong financial performance, in the U.S. we paid record profit-sharing payments to about 47,000 eligible U.S. hourly employees. Profit-sharing payments were approximately $8,800 per eligible employee on a full-year basis. Individual profit-sharing payments, which were made on March 13, 2014, were higher or lower based on employee-compensated hours.
In addition, in 2013, we made $5 billion in cash contributions to our worldwide funded pension plans, up $1.6 billion compared with 2012. For 2014, cash contributions to funded plans are expected to be $1.5 billion globally. This is $3.5 billion lower than in 2013, reflecting Ford’s improved funded status.
Worldwide at year-end 2013, our pension plans were underfunded by $9 billion, about $6 billion of which is associated with our unfunded plans. In total, this represents an improvement of nearly $10 billion compared with the status at year-end 2012, driven primarily by higher discount rates and cash contributions.
In the U.S., our market share was up 0.5 percentage points to 15.7 percent of the industry. Our strong U.S. vehicle sales in 2013 reflected our balanced portfolio of fuel-efficient vehicles, as our passenger cars, utilities and trucks each reported gains. Cars were up 10 percent, utilities were up 9 percent and trucks expanded 13 percent. Retail sales across the country were up 14 percent, with strongest growth on the West Coast.
Market share increased slightly in South America – from 9.0 percent in 2012 to 9.3 percent in 2013 – and retail market share in Europe increased from 7.2 percent in 2012 to 8.2 percent in 2013 (based on the five major markets). For the year, Ford was the second best-selling car brand in the traditional 19 markets we tracked in Europe for the sixth consecutive year. And in Asia Pacific Africa, market share went up from 2.8 percent in 2012 to 3.5 percent in 2013 driven by growth in China.
To support our growth and manufacturing expansion, we are hiring in North America and Asia Pacific.
In North America, we created approximately 14,000 jobs during 2012 and 2013 alone as part of our largest hiring initiative since the beginning of the new millennium. In 2013, we hired nearly 3,000 salaried employees in the U.S. – most of them technical professionals to work in product development, manufacturing, quality and information technology. We expect to hire about 6,000 employees in Asia Pacific in 2014, the vast majority of them hourly employees.
As we expand our product lineup of fuel-efficient vehicles, we need more people in critical areas, such as engineering, vehicle production, computer software and other information technology functions. To attract new team members, we are expanding our use of social media to reach new, technology-savvy workers, and we’re stepping up our efforts to reach military veterans. See the People section for more on employment at Ford.
Globally, we’re continuing to add new jobs in Asia Pacific. However, in Europe we had to make the difficult decision to close three plants, affecting approximately 13 percent of our European work force (excluding Russia).
A critical component of our recent business strategy has been our focus on realigning production with demand. This has meant retooling some facilities as flexible manufacturing sites, allowing for multiple types of products to be built on the same line. In some cases, this has also meant retooling facilities that previously built large trucks and sport utility vehicles (SUVs) to instead manufacture smaller and/or more energy-efficient vehicles. To these ends, and in conjunction with our 2011 bargaining agreement with the UAW1, we estimate we will invest $6.2 billion in U.S. plants by 2015.
For example, we invested $550 million to overhaul our Michigan Assembly Plant, which formerly built two full-size SUVs. Today, it is the only manufacturing site in the world to build vehicles with five different fuel-efficient powertrains on the same line. The plant is setting a new global standard for flexible manufacturing. More than 80 percent of the tooling in the plant’s body shop can be programmed to produce a variety of body styles, allowing us to quickly adjust the mix between models as customer preferences change.
We are rapidly expanding our advanced manufacturing capabilities and boosting global production to meet consumer demand. By 2017, we will increase our global flexible manufacturing to produce, on average, four different models at each plant around the world, allowing for greater adaptability based on varying customer demand. Also in 2017, virtually all Ford vehicles will be built off nine global core platforms, boosting manufacturing efficiency while giving customers the features, fuel efficiency and technology they want.
The benefits of our platform strategy are more products, faster product introductions, and better profitability. Optimizing platform count lets us increase volume per platform, improve our engineering efficiencies, and gain efficiencies of scale for ourselves and for our suppliers.
Other recent plant investments in the U.S. include the following:
We’re committed to growth in other parts of the world, too. To meet increasing demand in the Asia Pacific region, for example, we are building six new plants – four in China and two in India.
© 2014 Ford Motor Company