Ford Motor reported better-than-expected third quarter earnings Wednesday as price increases offset input cost pressures and currency headwinds $F had previously warned about. The auto major tightened it’s its guidance for full-year profits to around $11.5 billion, down from a prior estimate of between $11.5 billion to $12.5 billion. Ford said it would wind-down its autonomous vehicle joint venture Argo AI with Germany’s Volkswagen. Ford booked a $2.7 billion non-cash charged linked to its investment as it transitions to what it called “internally developed technology”.
Ford Q3 22 Earnings:
- Adj EPS: $0.30 (exp $0.27) fell 41.2% from last year
- Automotive Revenue: $37.2B (exp $36.25B)
- Sees Year Adj EBIT About $11.5B (prev $11.5B-$12.5B)
- Records $2.7B Non-Cash, Pre-Tax Impairment On Argo Stake
Stock Market Reaction
- $F 12.60 -0.22 (-1.68%) After hours
- Closed $12.82 -8.95 (41.11%) YTD, 12.82 +0.55 (+4.48%) Over 5 Years
Ford said last month negotiations resulting in inflation-related supplier costs will run about $1 billion higher than originally expected. The carmaker anticipated third quarter adjusted earnings before interest and taxes to be in the range of $1.4 billion to $1.7 billion.
Supply shortages held down Ford’s overall September sales total, although the automaker shifted 464,674 vehicles over the whole of the third quarter, a 16% improvement from the same period last year.
“Winning for customers is driving a re-founding of the company through Ford+, with high ambitions for quality, innovation, profitability and growth across all our businesses – making smart choices about how we deploy capital even as we learn and adapt,” said CEO Jim Farley.
Ford EV
Ford has been aggressive in expanding its own lineup of electric vehicles, having recently started production of its own battery-powered pickup, the F-150 Lightning. The Lightning is a direct competitor to one of Rivian’s first models, the all-electric R1T pickup, which went on sale late last year.
Earlier this month, Ford raised prices for the 2023 model its signature EV, the F-150 Lightning Pro, by around 11%, to just under $52,000, citing “ongoing supply chain constraints, rising material costs” and a host of other factors.
Ford’s competition is strong with GM preparing to launch at least three more new EVs in 2023, growing its EV lineup that includes the Hummer truck and Cadillac Lyriq SUV. EV startup Rivian in which Ford was an initial investor but has sold down its stake after share sales, has released new electric SUV’s this year that have had issues leading to recalls.
Argo AI
In the third quarter, Ford made a strategic decision to shift its capital spending from the L4 advanced driver assistance systems being developed by Argo AI to internally developed L2+/L3 technology. Earlier, Argo AI had been unable to attract new investors. Accordingly, Ford recorded a $2.7 billion non-cash, pretax impairment on its investment in Argo AI, resulting in an $827 million net loss for Q3,” Ford said in a statement.
GM
Ford’s larger rival, General Motors $GM, earlier this week reported third quarter earnings of $2.25 per share, on record revenues of $41.9 billion, in part to higher car prices and ongoing vehicle demand. The numbers were better than expected.
GM sold just under 555,600 cars over the three months ending in September, a 24% from last year which saw it reclaim the nine-month U.S. lead over Toyota (TOYOF). Toyota beat both Ford and GM in total 2021 sales for the first time since 1931.
GM also repeated its view that adjusted 2022 earnings will come in between $6.50 and $7.50 per share, or $13 billion to $15 billion, with adjusted automotive free-cash flow from operations of between $7 billion and $9 billion.
Outlook
Ford also clipped its guidance for full-year profits, which it sees at around $11.5 billion, down from a prior estimate of between $11.5 billion to $12.5 billion. Free cash flow, however, is likely to rise to between $9.5 billion and $10 billion.
“We are starting to see some signs that the inflation and the higher prices are impacting the consumer,” Ford CFO John Lawler told Yahoo Finance Live (video above). “What we’re seeing is a narrowing of what consumers are willing to pay, or that a discount versus the suggested retail price is a bit higher.”
“We’re also seeing consumers are looking for longer-term loans, 84 months and beyond, given that payments are higher,” Lawler said. “They’re trying to keep that payment into a range they think is affordable.”
Source Ford
From The TradersCommunity News Desk