Ford sinks after fourth-quarter earnings fell short of expectations, CEO says $2 billion left on table

Ford (F) shares tumbled late Thursday after the automaker reported fourth-quarter earnings that fell short of expectations, with CEO Jim Farley saying the company “should have done much better last year.”

Ford reported quarterly adjusted EBIT – or earnings before interest and taxes – of $2.6 billion, falling short of Wall Street’s expectations of $3.45 billion. On a per-share basis, adjusted earnings also fell short of expectations at $0.51 vs. analysts’ forecast of $0.62. Ford shares fell 8% after hours on Thursday.

Ford reported on the block;

  • Revenue: $44.0 billion vs. $39.9 billion expected

  • Adjusted earnings per share: $0.51 vs. $0.62 expected.

  • App. EBIT: $2.6bn vs $3.45bn expected

The revenue figure represents a 17% jump from last year, when Ford was still struggling with component and chip shortages.

In terms of profitability, Ford reported an adjusted full-year EBIT (earnings before interest and taxes) of $10.4 billion, lower than its previous guidance of $11.5 billion.

“Last year we should have done a lot better,” said Ford CEO Jim Farley. “We left about $2 billion in profits on the table that were under our control, and we’re going to fix that by improving execution and performance.”

Ford announced full-year 2023 EBIT guidance of $9 billion to $11 billion; the consensus estimate was about $10 billion. Ford also declared a regular first-quarter dividend of 15 cents per share and an additional dividend of 65 cents per share, reflecting the company’s monetization of its stake in Rivian.

Last quarter, Ford CFO John Lawler noted that some customers are hesitant about higher sticker prices and are using long-term debt financing to ease monthly payments. Lawler also said that Ford sees customers moving up to higher trim levels to buy more affordable vehicles.

The street was expecting Ford to have a strong quarter after GM’s monstrous fourth-quarter results, when the automaker posted huge profits and record earnings. GM also topped its EBIT guidance for all of 2022 and also sent its 2023 guidance higher than analysts expected, generating $11.5 billion in EBIT this year.

Investors will be on the lookout for new demand problems at Ford due to slower macroeconomic conditions and higher interest rates. Ford said in its earnings report that potential headwinds it sees include “a mild recession in the US and a moderate recession in Europe; higher industry incentives for customers as vehicle demand and supply rebalance; lower profits from Ford Credit.”

On the other hand, Ford said it sees potential tailwinds such as “improving the supply chain and increasing production; the launch of an all-new Super Duty truck; and lowering the cost of goods sold, including materials, goods, logistics and other parts of industrial production.” Platform.”

This story is evolving.

The 40 millionth Ford Motor F-Series pickup truck is on display for a photo op next to the first generation Ford F-1 at the Dearborn Truck Plant in Dearborn, Michigan, USA January 26, 2022.  The picture was taken on January 26, 2022.  REUTERS/Rebecca Cook

The 40 millionth Ford Motor F-Series pickup truck is on display for a photo op next to the first generation Ford F-1 at the Dearborn Truck Plant in Dearborn, Michigan, USA January 26, 2022. The picture was taken on January 26, 2022. REUTERS/Rebecca Cook

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and beyond Instagram.

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