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Ford misses quarterly earnings estimates, issues lower 2020 outlook; CFO says guidance 'appropriate'

Brian Sozzi
Editor-at-Large

Ford (F) could see some investors drive away from the stock following its fourth quarter earnings release Tuesday afternoon.

  • 4Q Net sales: $39.7 billion vs. $36.3 billion estimate

  • 4Q Adjusted diluted EPS: $0.12 vs. $0.17 estimate

  • FY20 EPS outlook: $0.94 to $1.20 vs. $1.31 estimate

Admitted execution issues in the U.S. tied to the new Explorer SUV and challenging conditions for automakers globally weighed on Ford to close out 2019. The company’s sales fell 5% from the prior year, adjusted operating profit margins dropped 230 basis points and free cash flow decreased to $500 million from $1.5 billion. Sales dropped in all geographic regions.

One saving grace was a 61% bottom line improvement in China, reflecting Ford’s efforts to restructure the business.

In this Sunday, Oct. 20, 2019, photograph, the company logo shones off the mesh grille of an unsold 2019 Edge ST sports-utility vehicle at a Ford dealership in Littleton, Colo. (AP Photo/David Zalubowski)

While Ford has made good progress on its $11 billion restructuring plan unveiled in 2018 and moved quickly to pivot to electric vehicle production (see new investments in Tesla rival Rivian and partnership with Volkswagen), investors may be taken aback by Ford’s early 2020 profit outlook.

Ford CFO Tim Stone says the outlook — which is well below consensus forecasts — doesn’t include any “influence” from the coronavirus outbreak in China. Stone declined to share the status of Ford’s business in China except that they are monitoring the coronavirus situation and believes it’s “very fluid” and is taking “actions” for customers.

“The guidance we have given is appropriate,” Stone said, adding that the outlook reflects headwinds such as late in the year launches of the new F-150 and electric Mach E and benefits from restructuring efforts.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET or on Verizon FIOS channel 604. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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