Ford Cuts Pretax Profit Forecast

Ford Motor Co. tells investors it expects to report a pretax profit of $6 billion in 2014, short of the $7 billion-$8 billion it expected. The announcement prompted a 7% drop in the closing price of Ford shares on Monday.

The company says it adjusted its forecast downward because of an estimated $1 billion in recall costs, deteriorating markets in South America and softer-than-expected sales in Europe, especially Russia.

Ford forecasts revenue will be flat at around $139 million, as an upturn in North America is offset by big losses elsewhere. The company now expects to lose $1 billion in South America with only moderate relief in 2015. It anticipates a loss of $1.2 billion in Europe this year and $250 million in 2015.

In the longer term, Ford expects its annual global vehicle sales will expand as much as 55% to 9.4 million units by 2020. Over the same period the company anticipates its operating margin will reach 8% with revenue growth greater than 5%.

Ford also forecasts that worldwide demand for its Lincoln luxury cars will triple to 300,000 by the end of the decade. The company says sales will be driven by two new models and a big push in China.