Jan 29, 2015 | Dearborn, Mich.
Ford Credit Earns Full-Year 2014 Pre-Tax Profit of $1.9 Billion; Net Income of $1.7 Billion*
DEARBORN, Mich., Jan. 29, 2015 – Ford Motor Credit Company reported a pre-tax profit of $1.9 billion in 2014, its highest since 2011, up from $1.8 billion a year earlier. The improvement is more than explained by higher volume, partially offset by unfavorable lease residual performance in North America and lower financing margin. Ford Credit’s net income was $1.7 billion in 2014, compared with $1.5 billion in the previous year. The increase in net income reflects favorable tax items recorded during the year.
In the fourth quarter of 2014, Ford Credit’s pre-tax profit was $423 million, an increase of $55 million from a year ago. The improved pre-tax profit is more than explained by higher volume and favorable market valuation adjustments to derivatives. A partial offset is lower financing margin. Ford Credit reported fourth quarter net income of $411 million, compared with $568 million a year earlier. The decrease in net income was primarily driven by the nonrecurrence of favorable tax items recorded in the fourth quarter of 2013.
“Our team once again delivered a strong performance in 2014,” Chairman and CEO Bernard Silverstone said. “In 2015, with continued consistent standards, we remain focused on delivering exceptional products and services to dealers and customers, as well as strong strategic value and profits, in support of Ford’s business.”
On Dec. 31, 2014, Ford Credit’s total net receivables were $108 billion, compared with $100 billion at
year-end 2013. Managed receivables were $113 billion at year-end, up from $103 billion a year ago. Year-end managed leverage was 8.7:1, compared with 8.5:1 at year-end 2013.
For 2015, Ford Credit expects full-year pre-tax profit to be equal to or higher than 2014, year-end managed receivables of $123 billion to $128 billion, managed leverage to continue in the range of 8:1 to 9:1, and distributions to its parent of about $250 million.
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About Ford Motor Credit Company
Ford Motor Credit Company LLC has provided dealer and customer financing to support the sale of Ford Motor Company products since 1959. Ford Credit is a wholly owned subsidiary of Ford. For more information, visit www.fordcredit.com or www.lincolnafs.com.
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* The financial results discussed herein are presented on a preliminary basis; final data will be included in Ford Credit’s Annual Report on Form 10-K for the year ended Dec. 31, 2014.
Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
- Decline in industry sales volume, particularly in the United States or Europe, due to financial crisis, recession, geopolitical events, or other factors;
- Decline in Ford’s market share or failure to achieve growth;
- Lower-than-anticipated market acceptance of Ford’s new or existing products;
- Market shift away from sales of larger, more profitable vehicles beyond Ford’s current planning assumption, particularly in the United States;
- An increase in or continued volatility of fuel prices, or reduced availability of fuel;
- Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
- Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
- Adverse effects resulting from economic, geopolitical, or other events;
- Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions;
- Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors);
- Single-source supply of components or materials;
- Labor or other constraints on Ford’s ability to maintain competitive cost structure;
- Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition;
- Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns);
- Restriction on use of tax attributes from tax law “ownership change;”
- The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;
- Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and/or sales restrictions;
- Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;
- A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller (“take-or-pay” contracts);
- Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments;
- Inherent limitations of internal controls impacting financial statements and safeguarding of assets;
- Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier;
- Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
- Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;
- Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
- Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles; and
- New or increased credit, consumer, or data protection or other regulations resulting in higher costs and/or additional financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A, Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.