Ford easily tops revenue, adjusted EPS expectations
Ford Motor Co.’s stock soared more than 6% in the extended session Tuesday after the carmaker reported quarterly revenue above Wall Street’s expectations and announced a next-generation, smaller EV to rival Tesla Inc.’s upcoming “Model 2.”
Ford F, +4.14% touted giving customers a “wide range of choice” between gas, hybrids and EVs, in a jab to competitors General Motors Co. GM, +0.64% and Tesla TSLA, +2.23%, said it was looking at about $2 billion in cost reductions this year, and announced a special dividend.
The year 2023 was “solid,” but Ford is nowhere near done, Chief Executive Jim Farley said in a call after the results. “We are really positioned well for growth and for profitability, for revenues, as well.”
Ford will spend less capital on larger EVs, offer a smaller number of those, and focus on smaller EVs to be built on a next-generation platform, he said.
“All of our EV teams are ruthlessly focused on cost … because the ultimate competition is going to be the affordable Tesla and the Chinese OEMs,” Farley said.
Farley’s message seemed to resonate with investors, with shares adding to gains as the call progressed.
“Investors appear to be encouraged by signs of strong demand for Ford’s combustion trucks and SUVs in North America, as well as ongoing cost-cutting measures,” said Jesse Cohen, a senior analyst at Investing.com
Ford is also putting more focus on returning cash to shareholders, which is always a positive sign, he said. Looking ahead, cost-cutting will play a big role in hitting forecasts, Cohen said.
Ford lost $526 million, or 13 cents a share, in the fourth quarter, contrasting with earnings of $1.3 billion, or 32 cents a share, in the year-ago period.
Adjusting for one-time items, including a pre-tax loss related to pensions and other post-retirement benefits, the carmaker earned 29 cents a share in the quarter, easily topping FactSet consensus for adjusted earnings of 12 cents a share.
Revenue shot up to $46 billion, from $44 billion a year ago, and well above FactSet’s forecast of $43.1 billion.
Chief Financial Officer John Lawler said in a statement that Ford will improve its capital efficiency “by both selectively reducing investments and raising the bar” on the expected returns of initiatives it greenlights.
EVs are a “great illustration,” Lawler said, recalling that Ford said months ago it was deferring some EV investments.
Chief Operating Officer Kumar Galhotra said that the company has identified about $2 billion in cost reductions in areas such as materials, freight and manufacturing.
Ford guided for 2024 adjusted EBIT between $10 billion and $12 billion, with $6 billion to $7 billion in adjusted free cash flow. Capital expenditures were seen between $8 billion and $9.5 billion.
The company also called for 2024 EBIT of at least $8 billion to $9 billion from Ford Pro, its unit focusing on fleet and commercial customers, and about $7 billion to $7.5 billion from Ford Blue, its unit focused on traditionally powered vehicles.
The EV unit is expected to incur an EBIT loss of $5.0 billion to $5.5 billion, Ford said.
The company also declared a first-quarter regular dividend of 15 cents a share and a supplemental dividend of 18 cents a share, payable on March 1 to shareholders of record on Feb. 16.
Ford shares are off about 8% in the past 12 months, contrasting with gains of about 20% for the S&P 500 index SPX in the same period.