Ford Earnings: Automaker Easily Beats on Q4 Revenue; 2024 Profit Outlook Tops Expectations
Ford (F) shares are rising in after-hours trading as the automaker surpasses expectations with its fourth-quarter sales and projects a full-year profit outlook that exceeds estimates. Despite facing continued losses in its EV unit, Ford’s strong results follow a trend of robust performance in the overall US auto sector, as demonstrated by GM’s recent favorable results and profit guidance.
Ford reported top-line revenue of $46.0 billion, surpassing Bloomberg’s estimated $40.35 billion. This figure represents a $2 billion increase compared to the previous year, despite the lingering impact of the United Auto Workers (UAW) strike in early Q4. In terms of profitability, Ford reported adjusted EPS of $0.29, higher than the estimated $0.13, with adjusted EBIT totaling $1.1 billion, exceeding the expected $988.2 million.
For the year, Ford achieved $10.3 billion in adjusted EBIT, at the upper end of its full-year 2023 adjusted EBIT outlook of $10.0 billion to $10.5 billion. These figures include $1.7 billion in strike-related lost profits. Ford reinstated its 2023 profit outlook following the ratification of its labor deal with the UAW.
Looking ahead to the full-year outlook for 2024, Ford projects an adjusted EBIT of $10 billion to $12 billion. While slightly lower than Ford’s pre-UAW strike 2023 profit outlook of $11 billion to $12 billion, this projection still exceeds estimates of $9.24 billion. In comparison, Ford’s competitor GM issued 2024 profit guidance that aligns with its initial pre-UAW strike outlook for 2023.
The guidance presumes flat to modestly higher full-year U.S. industry volume, with overall lower vehicle pricing, stated the company.
In addition to its financial performance, Ford also made important announcements regarding its dividends and capital efficiency. The automaker declared a regular dividend of $0.15 per share for the first quarter and a supplemental dividend of $0.18 per share. Ford’s CFO, Jim Lawler, emphasized the company’s commitment to improving capital efficiency by selectively reducing investments and setting higher expectations for returns on new initiatives.
Notably, Ford experienced substantial losses in its Model e unit, which recorded an EBIT loss of $4.7 billion for the year. The company attributed these losses to fierce pricing competition and strategic investments in the development of next-generation EVs. Looking forward to 2024, Ford projects a wider EBIT loss of $5.0 to $5.5 billion, highlighting the unit’s continued struggle.
Ford’s recent decision to move workers and adjust supply in its F-150 Lightning EV production suggests a response to slowing demand. Ford’s Model e spokesperson, Martin Günsberg, noted that while growth persists, it is occurring at a slower pace, prompting necessary adjustments.
Regarding the Model e business, Ford previously stated that it would delay $12 billion in EV investments until the capacity is required. The construction of its new battery plant in Michigan has also been postponed, with the factory scheduled to open in 2026.
Despite witnessing declining sales of its EVs in January, primarily due to the Mustang Mach-E losing federal EV tax credit eligibility, Ford experienced overall growth in total auto sales. Hybrids sales surged more than 40%, with June recording a 10% drop fueled by lower Mustang Mach-E sales. In response to customer demand, Ford plans to expand its hybrid offerings in the market.
Ford’s overall performance in January mirrored its successes in 2023, with US total sales reaching approximately 1,995,912 vehicles, making it the company’s best year since 2020. Ford particularly excelled in the trucks business, with sales of trucks and vans increasing by 13%. Noteworthy growth was observed in the Bronco Sport (up 28.1%), Edge (up 24.1%), and Lincoln Navigator (up 32.9%), among others.
Additionally, Ford’s sales of hybrids achieved a 25.3% growth rate, while EV sales saw a boost of 17.9% in 2023.
As Ford looks ahead to the future, it anticipates maintaining its strong performance in the auto industry while strategically addressing challenges in the EV market. By balancing its traditional gas-powered business, EV division, and commercial and super duty truck business, Ford strives to enhance its profitability and ensure sustainable growth.
In conclusion, Ford’s impressive fourth-quarter revenue and optimistic profit outlook for 2024 indicate the automaker’s resilience and ability to adapt to market conditions. While continuing losses in its EV division pose ongoing challenges, Ford remains focused on improving capital efficiency and delivering stronger returns on investments. With a strong overall performance in 2023 and promising growth in its hybrid sales, Ford is poised to navigate the evolving auto landscape and meet customer demands.
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