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S&P revises outlook on Ford to negative on profitability concerns

S&P Global Ratings revised the outlook on Ford Motor Co. to negative from stable, citing weaker-than-expected profitability amid the U.S.-based automaker's significant underperformance in Europe and Asia Pacific in recent quarters.

The underperformance is increasing pressure on Ford's profitability from softening industry demand in North America, the rating agency said. Restructuring actions to address unprofitable segments and regions would increase execution risks as the automaker seeks to improve its profit margins in line with peers by 2020.

The negative outlook reflects the increased likelihood of a downgrade over the next 12 to 24 months given prolonged weakness in Ford's profitability and cash flow relative to S&P's expectations for 2018 and 2019. The rating agency said it could downgrade the company if it fails to address underperformance in Europe and China or is unable to sharpen its focus on profitable segments in a timely manner.

The rating agency affirmed Ford's issuer credit and senior unsecured ratings at BBB. It also affirmed the ratings of Ford unit Ford Motor Credit Co. LLC and revised the outlook to stable from negative.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.