Ford Motor Beats Q4 Expectations and Forecasts Strong Results for 2024
Ford Motor Company has exceeded Wall Street’s expectations for the fourth quarter, while also providing a positive forecast for 2024. The company’s projections for 2024 indicate adjusted earnings before interest and taxes (EBIT) between $10 billion and $12 billion, adjusted free-cash flow of $6 billion to $7 billion, and capital spending of $8 billion to $9.5 billion. Analysts had predicted Ford’s guidance to be around $9 billion to $11 billion.
In addition to surpassing expectations, Ford announced a special dividend of 18 cents per share, along with a regular dividend of 15 cents per share for the first quarter. These dividends will be paid out on March 1 to shareholders of record as of February 16. As a result of this positive news, Ford’s stock experienced a 7% increase during afterhours trading, following a 4.1% increase during regular trading hours.
Let’s take a closer look at how Ford performed in the fourth quarter compared to Wall Street’s estimates:
– Earnings: Ford achieved an adjusted earnings per share of 29 cents, surpassing the expected 14 cents per share.
– Automotive revenue: The company generated $43.2 billion in automotive revenue, exceeding the anticipated $40.12 billion.
Overall, Ford’s revenue for the period increased by approximately 4% to $46 billion, compared to around $44 billion in the previous year. However, adjusted EBIT declined by 59% to $1.05 billion compared to the same period last year.
Ford’s fourth-quarter results for 2022 included $41.8 billion in automotive revenue, net income of $1.3 billion, and adjusted EBIT of $2.6 billion. The adjusted earnings of Ford’s traditional business, known as Ford Blue, decreased by about 48% in the fourth quarter compared to the previous year, amounting to $813 million. On the other hand, Ford’s Ford Pro commercial business experienced a 25% increase, earning $1.81 billion. However, Ford’s Model e electric vehicle unit suffered a loss of $1.57 billion from October to December, more than doubling the loss of $631 million in the fourth quarter of 2022.
For the entire year, Ford reported adjusted EBIT of $10.42 billion, which was consistent with 2022 figures. The company’s revenue reached $176.2 billion, representing an 11% increase compared to the previous year. Adjusted free cash flow amounted to $6.8 billion, down $2.3 billion from the previous year. Net income improved significantly, reaching $4.33 billion compared to a loss of $2.15 billion in 2022.
Looking ahead, Ford has forecasted adjusted EBIT of $10 billion to $10.5 billion for 2023. This projection is approximately $1 billion lower than previous guidance due to ongoing contract negotiations with the United Auto Workers union. Ford’s Chief Financial Officer, John Lawler, mentioned that the company is actively seeking ways to offset rising labor costs resulting from the new UAW contract. The contract is expected to cost Ford $8.8 billion until its conclusion in April 2028. As a result, Ford has already announced plans to delay or reduce spending on various electric vehicle products.
Despite potential challenges such as lower vehicle prices, warranty costs, and continued losses in the electric vehicle segment, Ford anticipates positive performance in its Ford Pro fleet unit and traditional Ford Blue internal combustion engine business.
In conclusion, Ford Motor Company has exceeded expectations for the fourth quarter and provided a positive outlook for 2024. With strong financial results and strategic plans in place, Ford is poised for continued success in the automotive industry.