Ford’s latest earnings report for the fourth quarter has propelled its stock (F) higher in after-hours trading, buoyed by revenue figures that exceeded expectations and a promising profit outlook for 2024, despite ongoing losses in its electric vehicle (EV) unit. The results follow strong performances and profit forecasts from rival GM (GM), indicating a robust US auto sector overall.
In Q4, Ford reported top-line revenue of $46 billion, surpassing Bloomberg’s estimate of $40.35 billion, marking a $2 billion increase compared to the previous year, despite the residual impact of the United Auto Workers (UAW) strike earlier in the quarter. On the profitability front, Ford’s adjusted earnings per share stood at $0.29, exceeding the estimated $0.13, with adjusted earnings before interest and taxes (EBIT) reaching $1.1 billion, compared to the expected $988.2 million.
For the full year, Ford achieved adjusted EBIT of $10.3 billion, falling within the higher range of its 2023 adjusted EBIT outlook of $10 billion to $10.5 billion, which accounts for $1.7 billion in strike-related losses. The reinstatement of Ford’s 2023 profit outlook followed the ratification of its labor agreement with the UAW. Looking ahead to 2024, Ford anticipates adjusted EBIT in the range of $10 billion to $12 billion, slightly below its pre-UAW strike 2023 profit outlook but exceeding estimates of $9.24 billion.
Despite projecting losses for its EV unit, Ford remains optimistic about its overall prospects. The company declared a first-quarter regular dividend of $0.15 per share and a supplemental dividend of $0.18 per share. Ford’s CFO, John Lawler, outlined plans to enhance capital efficiency by selectively reducing investments and raising performance expectations for new initiatives, aiming to elevate total adjusted return on invested capital from approximately 14% in 2023 to 20% within the next few years.
Last year, Ford reorganized into three distinct business units: Ford Blue for traditional gas-powered vehicles, Ford Model e for EVs, and Ford Pro for commercial and Super Duty truck operations. In Q4, Ford reported the following figures across its business lines:
Ford Blue:
- Revenue: $26.2 billion (vs. estimated $24.52 billion)
- EBIT: $813 million (vs. estimated $866.5 million)
Ford Model e:
- Revenue: $1.6 billion (vs. estimated $1.91 billion)
- EBIT: Loss of $1.57 billion (vs. estimated loss of $1.34 billion)
Ford Pro:
- Revenue: $15.4 billion (vs. estimated $13.86 billion)
- EBIT: $1.81 billion (vs. estimated $1.43 billion)
The Model e unit incurred an EBIT loss of $4.7 billion for the year, attributed to intense pricing competition and strategic investments in next-generation EV development. Looking ahead to 2024, Ford expects the Model e unit to face wider losses, projecting an EBIT loss of $5 billion to $5.5 billion.
Ford’s CEO, Jim Farley, highlighted significant shifts in the EV market, emphasizing consumer reluctance toward higher-priced EVs. The company plans to channel investments into next-generation EV development, with a focus on profitability and smaller EV models. Farley also disclosed ongoing efforts to develop a low-cost EV platform, potentially competing with Tesla’s forthcoming $25,000 EV.
Ford’s performance in January showcased a mixed picture, with declining EV sales offset by growth in hybrid sales and overall auto sales. Notably, the F-150 pickup segment remains a stronghold, with hybrids expected to comprise a significant portion of future sales. The company remains committed to adapting to evolving market trends and meeting customer demand for hybrids and EVs.
