Ford earnings: Automaker easily beats on Q4 revenue; 2024 profit outlook tops expectations
Ford stock (F) pulled higher after hours after the automaker reported fourth quarter sales that easily topped expectations and projected a full-year profit outlook that beat estimates, though the company still sees more losses for its EV unit.
The results come after GM (GM) reported strong earnings and profit guidance last week that indicated strength in the overall US auto sector.
Ford reported top-line revenue of $46 billion vs. $40.35 billion estimated by Bloomberg, which is $2 billion more than a year ago despite the lingering effects of the United Auto Workers (UAW) strike in early Q4.
In terms of profitability, Ford reported adjusted earnings per share of $0.29 vs. $0.13 estimated, on adjusted EBIT (earnings before interest and taxes) of $1.1 billion, vs. the $988.2 million expected.
Shares of the automaker rose over 6% in premarket trading on Wednesday.
For the year, Ford notched $10.3 billion adjusted EBIT, at the higher end of its full-year 2023 adjusted EBIT outlook of $10 billion to $10.5 billion (which includes $1.7 billion in strike-related lost profits). Ford reinstated its 2023 profit outlook following the ratification of its labor deal with the UAW.
As for its 2024 full-year outlook, Ford projected adjusted EBIT of $10 billion to $12 billion—below Ford's pre-UAW strike 2023 profit outlook of $11 billion to $12 billion, but higher than estimates of $9.24 billion. Ford rival GM issued 2024 profit guidance that matched its initial pre-UAW strike outlook for 2023.
"The guidance presumes flat to modestly higher full-year US industry volume, with overall lower vehicle pricing," the company said in a statement.
Ford also declared a first quarter regular dividend of $0.15 per share and a supplemental dividend of $0.18 per share.
Ford CFO John Lawler said in a statement that Ford will improve capital efficiency by selectively reducing investments and "raising the bar" on expected returns for new initiatives.
“The objective is to improve total adjusted return on invested capital from about 14% in 2023 to 20% over the next couple of years,” Lawler said. “Simply ‘good’ isn’t good enough, and investments are going to projects that have credible plans to deliver their targeted returns.”
Last year, Ford divided into three business units: Ford Blue for the traditional gas-powered business, Ford Model e for the EV division, and Ford Pro for its commercial and Super Duty truck business. Across these business lines, here's what Ford reported for Q4:
Ford Blue
Revenue: $26.2 billion vs. $24.52 billion est.
EBIT: $813 million vs. $866.5 million est.
Ford Model e
Revenue: $1.6 billion vs. $1.91 billion est.
EBIT: $1.57 billion loss vs. $1.34 billion loss est.
Ford Pro
Revenue: $15.4 billion vs. $13.86 billion est.
EBIT: $1.81 billion vs. $1.43 billion est.
For the year, Ford's Model e unit recorded an EBIT loss of $4.7 billion, which the company said reflected "an extremely competitive pricing environment, along with strategic investments in the development of clean-sheet, next-generation EVs."
For 2024, Ford is projecting the Model e unit to record an EBIT loss of $5 billion to $5.5 billion — indicating wider losses in the business unit compared to 2023.
"We think there has been a seismic change in the past six months,” Ford CEO Jim Farley said on the conference call regarding the EV market in the US, where customers are balking at higher prices. The investment in EVs this year, Farley said, will fund the development of next-gen EVs.
“Our next gen-2 products will be profitable in the first 12 months of their launch,” Farley said, also indicating that the company would focus more on making smaller EV products that will be profitable.
Farley also revealed over the past two years that Ford has had a "skunk works" team working internally on making a low-cost EV platform, hinting at a rival to Tesla's upcoming $25,000 EV.
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Earlier in January, Ford moved 1,400 workers off F-150 Lightning EV production and cut a shift as the company adjusted supply to what appears to be slowing demand for the strongly reviewed but steeply priced EV pickup. “We continue to see growth, just at a slower pace. We’re adjusting to that growth," Ford Model e spokesperson Martin Günsberg said to Yahoo Finance.
With regard to Ford's Model e business, last quarter, Ford said the company would "push out" $12 billion in EV investments when that capacity is needed. Ford also delayed the construction of its new battery plant in Michigan (which would use licensed technology from China’s CATL) and scaled back battery output. The factory is still scheduled to open in 2026.
Ford also saw declining sales of its EVs in January of this year, with EV sales dropping over 10%, mainly led by decreasing sales of the Mustang Mach-E, which lost federal EV tax credit eligibility on Jan. 1. The company did see overall auto sales climb, however, with hybrid sales jumping over 40%. Ford has said it will push to bring more hybrids to the market to meet customer demand.
Ford’s strength in January was a continuation of what the automaker saw in 2023 as well. Last month, the company reported US total sales jumped 7.1% to approximately 1,995,912 vehicles, making 2023 the Dearborn-based automaker’s best year since 2020. Ford noted strong sales in its trucks business, with 1,081,777 trucks and vans sold in 2023 — up 13%. Across its nameplates, Ford saw noted growth in the Bronco Sport (up 28.1%), Edge (up 24.1%), and Lincoln Navigator (up 32.9%), among others.
Ford’s sales of hybrids and EVs were also a highlight, with sales up 25.3% and 17.9% in 2023, respectively.
Farley also indicated on the conference call that he believes 25% of all F-150 pickup sales could be hybrids in the near future, and that the company was currently building hybrids "at capacity."
Correction: A previous version of this article misstated the first name of Ford CFO John Lawler. We regret the error.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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