Ford sets a special $1 billion dividend, but profit outlook disappoints

(Reuters) - Ford Motor Co F.N on Tuesday declared a $1 billion supplemental cash dividend, but its outlook for 2016 profit failed to exceed Wall Street's estimates, sending its stock down in after-hours trading.

The No. 2 U.S. automaker said it expected record 2015 pre-tax profit, excluding special items, in the “upper half” of its outlook for $10 billion to $11 billion. That is above the average analyst forecast of $9.4 billion, according to Thomson Reuters I/B/E/S.

Profit for 2016 will be at least as high, excluding special items, said Ford. Analysts were expecting pre-tax profit of $11 billion for 2016, on average.

“Their guidance is in line or below what was expected,” said Matthew Stover at Susquehanna Financial.

Ford shares dipped about 1 percent from Tuesday’s close, to $12.55, in after-market trading.

Ford’s chief financial officer, Bob Shanks, told investors at a conference in Detroit Tuesday evening the company expects higher costs this year as it invests in new model launches and technology-driven ventures to offer transportation as a service or develop autonomous vehicles. Shanks also cautioned that Ford’s North American margins, forecast at 9.5 percent or better for 2016, may not have much room to improve in a competitive market.

“At some point margins don’t grow any further,” Shanks said. The forecast margins for North America “are extremely strong margins for a volume manufacturer.” Healthier profits from Europe and Asia offer an opportunity for overall profit growth, he added.

The $1 billion supplemental cash dividend, or 25 cents per share, is in addition to the first-quarter regular dividend of 15 cents per share, which is unchanged from the dividend paid in the fourth quarter of 2015.

Ford paid $2.5 billion in dividends last year, up 20 percent from 2014.

At an industry conference in Detroit on Tuesday, Mike Jackson, chief executive of AutoNation Inc AN.N, the largest U.S. auto dealer group, said the peak of the industry’s cycle has been reached and a plateau began in the fourth quarter of 2015. Last year, U.S. auto sales hit a record 17.4 million vehicles, nearly breaking a record set in 2000.

Last March, rival automaker General Motors Co GM.N said it would buy back $5 billion worth of shares and distribute another $5 billion in dividends to shareholders by the end of 2016. GM is expected to offer a 2016 forecast Wednesday.

Additional reporting by Bernie Woodall; Editing by Sandra Maler, Bill Rigby and Leslie Adler