Ford Motor (F) CEO Jim Farley told the CNBC Investing Club exclusively Wednesday why the company is closing a Ford Focus plant in Germany. It’s because it’s very expensive and losing money. Farley told Jim Cramer that Ford plans to keep a second plant in Germany, one that’s profitable, open. The plant that’s staying in operation uses a Volkswagen platform and can make money off their scale. A collaborative agreement between Ford and Volkswagen was signed in June 2020 . We believe this news is positive for long-term shareholders. Management has previously laid out a goal of delivering 6% earnings before interest and taxes margins in Europe by 2023, and we think this news keeps Ford on this track. One thing that Farley has been unafraid to do, unlike his predecessors, is to restructure any money-losing operation. He’s successfully restructured the South American region . He’s done it in India . And now, he’s putting Europe on a more durable course for stronger profits. We believe this news will be meaningful to long-term earnings and it shows how Farley is taking no prisoners on his drive to profitability. In the first quarter , Ford reported EBIT margins of 3% in Europe. The automaker is currently targeting 10% company adjusted EBIT margins by 2026, which is also when the company plans to produce more than 2 million electric vehicles annually. Ford shares have had a rough 2022, down 44% year to date. But if you zoom out, the stock gained 136% in 2021, which puts the current price of around $11.50 more than 30% higher than its year-end 2020 close. The Club portfolio’s average cost basis per share is $9.36 — still a healthy 23.6% paper profit. We have a 2 rating on Ford, which means we would wait for a pullback before buying it. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
James Farley, president and chief executive officer of Ford Motor Co., speaks during a launch event for the 2022 Ford F-150 Lightning all-electric truck at the Rouge Electric Vehicle Center in Dearborn, Michigan, U.S., on Tuesday, April 26, 2022.
Emily Elconin | Bloomberg | Getty Images
View Article Origin Here
