Ford Europe Profits Hit Record In 2016.
Profit This Year Will Suffer From $600 million Currency Hit.
Ford Europe reported a record $1.2 billion pre-tax profit for 2016, then announced a day later that because of the fall in sterling since the Brexit vote June 23, it would take a $600 million charge in 2017.
In 2016, Ford Europe managed an operating margin of 4.2 per cent. Fourth quarter pre-tax profit was $166 million, up about $35 million from the same period of 2015.
“When Brexit happened we were fully hedged for the first quarter with the stronger pre-Brexit exchange rate. As we enter the rest of the year, especially the second half, we now face the full effects of the weaker sterling,” Ford of Europe President Jim Farley told Reuters.
Farley said sterling’s slump is the only major headwind it currently faces in Europe, which could be upwards of $600 million this year.
Ford, and other manufacturers, have been waging a losing battle with Britain to stay in the E.U. single market after Brexit. Prime Minister Theresa has now ruled this out.
“We’ve all built our businesses on an integrated model between the U.K. and the E.U. We would expect both entities to work for a free-trade arrangement like we have today,” Farley said.