Ford 2014 Annual Report Download - page 83

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
OUTLOOK
Business Environment
We project global economic growth to be in the 3% range led by the United States and China. Global industry sales
are expected to grow to between 88 million and 92 million units after estimated sales of 88 million units in 2014. U.S.
economic growth is expected to be in the 3% range. Consumer sentiment is improving, along with lower fuel prices,
which will boost consumer spending, providing support for growth. South America faces continued market volatility and
policy uncertainty. A weak recovery is expected in Brazil while Argentina and Venezuela will remain in recession. In
Europe, growth in the Euro Area slowed after the first quarter of 2014, but is projected at just above 1% in 2015. Growth
in the United Kingdom is projected to remain in the 2.5% to 3% range. In Russia, the combination of lower oil prices, geo-
political events, and ruble depreciation will lead to a sharp decline in gross domestic product and higher inflation. In Asia
Pacific, China’s economic growth is projected to be in the 7% to 7.5% range; consumer income growth will support an
increase in vehicle sales but at a more moderate pace this year. With some encouraging signs of improvement, growth in
India is projected to rise above 6% in 2015, supported by a more favorable policy environment. Overall, despite
challenges in some key markets, we expect the global economy to grow in 2015 and be supportive of our projection for
higher global industry volume this year.
Total Company
Our 2015 profit outlook by segment is as follows:
2014 Full Year
Results
2015 Full Year
Outlook
Automotive (Mils.)
North America $ 6,898 Higher (a)
- Operating Margin 8.4 % 8% - 9%
South America (1,162) Substantially Improved (a)
Europe (1,062) Improved (a)
Middle East & Africa (20) Loss
Asia Pacific 589 Higher (a)
Net Interest Expense (583) Equal To or Higher (a)
Ford Credit (Mils.) $1,854 Equal To or Higher (a)
__________
(a) Compared with 2014
North America
We expect North America to be strongly profitable, at a level higher than 2014, with an operating margin of 8% to 9%.
This outlook includes higher market share and net pricing, reflecting the impact of launching seven all-new or significantly
refreshed products, as well as the effect of the record 16 launches in 2014, many of which occurred late in the year. The
F-150 changeover and downtime at our Kansas City plant will impact our first quarter 2015 results.
South America
In South America, pre-tax results are expected to be substantially improved from 2014, but still be a loss. This outlook
reflects the continuation of difficult macroeconomic conditions, with industry volume about equal to 2014. We expect
higher market share in 2015 as a result of new product introductions, including the all-new Ka. We also expect higher net
pricing, in part due to the new products, but also to recover, at least in part, the unfavorable effects of weaker currencies
and high local inflation. Finally, our South America results will not include the operating results of our Venezuela
operations, including any impact of currency devaluations.
Europe
In Europe, pre-tax results are expected to improve from 2014, but still be a loss. This outlook reflects higher market
share, volume, and net pricing in the Europe 20 markets, despite intense competition across the region, as well as weak
economic growth in the Euro Area. This is updated from our September 2014 Investor Day guidance of a loss of about
$250 million, largely due to uncertainty around conditions in Russia, as well as higher pension expense in 2015 as a result
of even lower discount rates.
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