Ford Motor Company 2016 Annual Report
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FORD MOTOR COMPANY 2016 ANNUAL REPORT As Ford Motor Company continues to expand from an FINANCIAL HIGHLIGHTS auto company to an auto and a mobility company, the company remains focused on building on (in billions, except for percentages) 2015 2016 its global leadership in trucks, vans, commercial vehicles and Automotive Segment performance vehicles, while growing its global strength Revenue $ 140.6 $ 141.5 in utility vehicles. Operating margin 6.8% 6.7% At the same time, Ford is transforming underperforming Operating cash flow $ 7.3 $ 6.4 parts of its business, including luxury, small vehicles and Ford Credit emerging markets. Pre-tax profit $ 2.1 $ 1.9 In addition, Ford is driving for leadership in three Total Company emerging opportunity areas – electrification, autonomy Net income attributable to Ford Motor Company $ 7.4 $ 4.6 and mobility. Adjusted pre-tax profit (a) $ 10.8 $ 10.4 On the Cover Pictured on the front cover, clockwise from top left: (a) See pages 25 and 82 of Ford’s 2016 Form 10-K for definition and reconciliation to GAAP. Ford Super Duty, Chariot (a crowd-sourced ride-sharing service), Ford GT supercar, Ford Fusion Energi plug-in hybrid, Ford Explorer, Lincoln interior, next-generation Ford Fusion Hybrid autonomous development vehicle, Ford Ka+ and Ford Mustang. Pictured on back cover: A selection of Ford’s milestones and exciting announcements CREATING VALUE from 2016. The back cover features a selection of those announcements that correspond to an image on the front cover. GROWTH RISK Revenue growth that drives Optimized risk profile profit growth RETURNS REWARDS ROIC > Cost of Capital and Margins Top quartile Visit our Annual Report online 8%+ Core, 20% New shareholder returns for detailed company information and visual content: annualreport.ford.com Our financial objectives are focused on the drivers of value LETTER FROM OUR EXECUTIVE CHAIRMAN William Clay Ford, Jr. While our industry is changing faster than it has in the last 100 To address this and other challenges, we launched Ford Smart years, we know that our fundamental mission of making people’s Mobility LLC, a new subsidiary formed to design, build, grow and lives better remains the same. For us, that means continuing to invest in emerging mobility services. Our crowd-sourced shuttle make great cars, SUVs and trucks, but also embracing emerging service, Chariot, also is providing new transportation options in opportunities to move people in new ways. select U.S. cities and will continue to expand. In 2016, we made significant progress toward that goal. We also strengthened our leadership in bringing self-driving We delivered a substantial profit and achieved our seventh vehicles to market by announcing our next-generation Fusion consecutive year of solid earnings and positive operating-related Hybrid autonomous development vehicle and expanding our cash flow. autonomous vehicle test fleet. This year we plan to further expand the fleet and begin testing in Europe. In our core automotive business, we maintained our strong momentum by launching 11 new vehicles in 2016. We also “As the auto industry enters a announced that we will be adding 13 new electrified vehicle nameplates globally to our product portfolio in the next five years. new era of connectivity and smart As the auto industry enters a new era of connectivity and smart mobility, we also are developing new ways to move people and mobility we also are developing new things. That’s because mobility can impact every facet of our lives. ways to move people and things. For many of us, traffic jams are an inconvenience, but the lack of mobility has a much more profound impact on the most That’s because mobility can impact vulnerable members of our society. every facet of our lives.” Take, for instance, the ability to get to work. Not having reliable transportation is what makes a person leave a good job or limits We know, however, that meeting these challenges takes more their job search because they cannot get to certain locations. Just than just launching new products. That is why we established our imagine the possibilities if we can provide new mobility solutions City Solutions team, the only one of its kind in the auto industry, that could help people get to better jobs and, by extension, create to work with municipalities to propose, pilot and develop mobility economic opportunity. solutions tailored to individual communities. When you start to lose the ability to move around quickly, easily These, and all our other smart mobility efforts, will help us and safely, it can become a human rights issue. Mobility is as preserve and promote mobility by solving transportation essential to our well-being as is access to things like health care, challenges worldwide for future generations. We view it as both clean drinking water and food, or a safe place to live. an exciting opportunity and a big responsibility. Our Board of Directors and entire leadership team continue to focus on delivering business results in the present, while creating value and opportunity for the future. Through our products and services, investments and philanthropy, and the contributions of our employees, we are strengthening communities and improving people’s lives around the world. Thank you for your continued support of our efforts. Mobility solutions include Chariot William Clay Ford, Jr. shuttle service and Ford GoBike Executive Chairman 2018 Ford EcoSport 2017 Ford C-MAX Energi plug-in hybrid Ford ExxonMobil’s Speedpass+ LETTER FROM OUR PRESIDENT AND CEO Mark Fields It is a very exciting and transformational time for everyone At the same time, we understand priorities are changing. The associated with the Ford Motor Company. world is moving from just owning vehicles to owning and accessing shared vehicles. This is causing us to think very differently. It’s We are continuing to deliver consistently strong results in our core not just about selling vehicles but also providing transportation automotive business, and, at the same time, rapidly developing services at the same time. and investing in new mobility platforms that will help make people’s lives better while growing our business profitability. As we move forward in our business expansion, we are working to use that understanding as we pursue emerging opportunities. Our plan for creating value going forward is simple and straightforward: continue our expansion from an auto company to In electrification, we are focusing on our strengths – trucks, an auto and a mobility company. commercial vehicles, utilities and performance vehicles – to give our customers more of what they love about our products today, To do this, we are making choices on where to play, where not to like greater capability, more productivity and better fuel economy. play and how to win, focusing on three sets of strategic priorities, which include: In the next five years, we will launch 13 new electrified vehicles, including hybrid versions of the F-150 and Mustang, and an all-new • Fortifying the strengths in our core business; fully electric SUV that will deliver an estimated range of at least • Transforming the traditionally underperforming parts of our core 300 miles. Plus, we are testing wireless charging technology that business; and charges a car simply by parking over a charging pad. • Growing in emerging opportunities, including leading in In autonomy, our intent is to have an SAE level 4 fully autonomous electrification, autonomy and mobility. vehicle – with no steering wheel, brake or gas pedal – in commercial operation in 2021. On the way to achieving that Our core business is a strength we are building on, including milestone, we recently introduced our next-generation Fusion growing our global leadership in trucks, vans, commercial and Hybrid autonomous development vehicle and expanded our performance vehicles, while establishing an even stronger autonomous test fleet. position in SUVs. “Our plan for creating value going forward is simple and straightforward: continue our expansion from an auto company to an auto and a mobility company.” Globally, we launched 11 new vehicles in 2016 – like the all-new Super Duty and the new Escape. Our plan is to launch 11 more in 2017 – including a new F-150, EcoSport, Focus Electric, all-new Fiesta and Expedition, as well as an all-new Lincoln Navigator. Our vehicle leadership comes because we know our customers and what they want. 2017 Ford F-Series Super Duty 2018 Ford Expedition Next-generation Ford Fusion Hybrid autonomous development vehicle 2018 Ford Mustang In mobility, Ford Smart Mobility LLC, our new subsidiary, is focused on building technology platforms to support connectivity for both our shared- and owned-business models, while aggressively developing new products and services. For example, we acquired Chariot, an app-based, crowd-sourced shuttle service. It currently is available in San Francisco and Austin, and we have plans to expand to eight cities by the end of 2017 – including at least one globally. In addition to fortifying our core business and growing emerging opportunities, we also remain focused on transforming underperforming businesses. This includes generating appropriate returns on Lincoln, small vehicles and emerging markets. Recent progress includes Lincoln sales and satisfaction gains, resourcing small vehicle sourcing to low-cost countries and discontinuing 2017 Ford Edge Vignale sales operations in Japan and Indonesia and manufacturing operations in Australia. “In mobility, Ford Smart Mobility LLC, our new subsidiary, is focused on building technology platforms to support connectivity for both our shared- and owned-business models” Satisfying customers – a top priority 2017 Lincoln Continental FordPass How are these efforts paying off? Our continued success enabled us to reward our shareholders by distributing $3.5 billion to shareholders in 2016, including our first In 2016, we achieved our second-best year ever, with a full-year supplemental dividend of $1 billion.