(By Mani) Automaker Ford Motor Co. (NYSE: F) announced leadership team changes that provide clarity around CEO Alan Mulally's retirement as well as ensure a smooth succession plan. Effectively, Mulally will remain on at least through 2014.
Mulally, who has been credited with saving Ford from bankruptcy during credit crisis, staying on at least through 2014 is longer than most investors expected and should be viewed positively. Effective Dec.1, Mark Fields will become the COO and could succeed Mulally as CEO.
"While not announced, we believe this will allow for him (Fields) to make a smooth transition into the CEO role sometime after 2014," RBC Capital Markets analyst Joseph Spak said in a client note.
For the past seven years as executive vice president and president of The Americas, Fields has been responsible for the transformation of the company's North American operations and its record profitability. In the role, he has led the development, manufacturing, marketing and sales of Ford and Lincoln vehicles in the United States, Canada, Mexico and South America.
Moreover, by 2014, Europe should be on its way to improved profitability, further along their China push, and through a strong stretch on North America product allowing Mulally a final "victory lap" and handing over the reigns on solid footing.
The company announced a restructuring plan for its European operations, including the possible closure of its Genk plant in Belgium and to cease vehicle production by the end of 2014.
On the other hand, Ford saying that Mulally may be with the company for "longer" sent mixed signals over the succession. However, Fields would be a big contender for the top job at Ford, especially when Chairman Bill Ford hinted that he would like to have an insider handling the CEO job.
"I'd be surprised if we didn't have the next CEO come from inside. One of my responsibilities is to always look at talent not only internally, but externally and we'll continue to do that," Ford said in a conference call.
However, it would test the team effort of these two executives as they would need to adjust to their new responsibilities and prevent confusion among the subordinates as who should they go for their decisions.
Ford also announced five additional promotions. Joe Hinrichs is named executive vice president and president of The Americas from group vice president and president of Asia Pacific Africa.
Stephen Odell is named executive vice president and president of Europe, Middle East and Africa. He had been group VP and adds Africa to his purview. Jim Farley is named executive vice president of Global Marketing, Sales and Service and Lincoln. He had been a group vice president. He also adds responsibilities for Lincoln.
David Schoch is named group vice president and president of Asia Pacific. He had been chairman and CEO, Ford of China. John Lawler is elected a Ford Motor Company vice president and named chairman and CEO of Ford Motor China; He had been CFO, Ford Asia Pacific Africa.
Dearborn, Michigan-based Ford is one of the world's largest auto manufacturer offering cars, trucks, and other vehicles primarily under the Ford and Lincoln brands.
Ford reported net income of $1.63 billion for the third quarter, down from $1.65 billion in the prior-year quarter while earnings per share remained flat with last year at 41 cents per share. Excluding special items, it earned 40 cents per share, higher than last year's 34 cents per share consensus view of 30 cents per share for the quarter.
Revenues for the quarter declined 1 percent to $32.1 billion from $33.1 billion in the same quarter last year. Twelve Wall Street analysts' had a consensus revenue estimate of $31.07 billion for the quarter.
Looking ahead to fiscal 2012, Ford continues to expect total company pre-tax operating profit to be strong, but lower than 2011, with positive automotive operating-related cash flow.
However, the auto industry is highly cyclical with sales volumes influenced by employment levels, interest rates, and consumer confidence, among other things. A weaker-than-expected macro environment could result in increased pricing pressure/more incentives and lower-than-expected financial results.