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Ford Reports Q4 Loss, but Enjoys Full Year Profits

by | February 6, 2024

Ford took a hit in the fourth quarter courtesy of a massive charge, reporting a loss for the period. However, the company saw its revenue rise, and it finished in the black for 2023.

Farley angry on CNBC 9-14-23

Ford CEO Jim Farley said the company is creating a “product, software and services powerhouse.”

Detroit-area automaker Ford reported a loss of $526 million on revenue of $46 billion in the fourth quarter, largely attributable a $1.7 billion charge related to pension and other postretirement employee benefits plans.

Adjusted earnings for the quarter came in at $1.1 billion, which lagged last year’s adjusted earnings of $2.6 billion for Q4.

For the full-year 2023, revenue was up 11% to $176 billion, while net income improved year-over-year to $4.3 billion. The company’s adjusted EBIT of $10.4 billion was basically flat year-over-year and at the high end of guidance that Ford provided following ratification of its new contracts with the UAW in the U.S. and Unifor in Canada, the company noted.

Good enough results from new way

The numbers pleased investors, who have pushed the stock up 6.5% in after-hours trading. The shares closed at $12.07.

“We’re the only company that gives customers such a wide range of choices — gas, hybrid and electric vehicles — made possible by our Ford+ plan and the talented team that’s carrying it out,” said President and CEO Jim Farley. “Ford is creating a product, software and services powerhouse with huge potential for this year and the long haul.”

Ford CFO John Lawler

Ford CFO John Lawler says EVs are here to stay, customer adoption is growing, and their long-term upside is central to Ford+.

The numbers reflect some positives from the company’s new way of measuring its results in a world focused on successfully developing and profitably selling electric vehicles. CFO John Lawler said the company outperformed expectations in many metrics, such as adjusted free cash flow, which was $6.8 billion compared to the predicted $5 billion to $5.5 billion. He noted the balance sheet was strong, with $29 billion in cash and $46 billion in liquidity.

He noted Ford will improve capital efficiency by both selectively reducing investments and raising the bar on expected returns for initiatives that the company greenlights.

“The objective is to improve total adjusted return on invested capital from about 14% in 2023 to 20% over the next couple of years,” Lawler said in a statement. “Simply ‘good’ isn’t good enough and investments are going to projects that have credible plans to deliver their targeted returns.”

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Charging up EVs

“EVs are here to stay, customer adoption is growing, and their long-term upside is central to Ford+,” said Lawler. “The customer insights we’re getting by being an early mover in electric pickups, SUVs and commercial vehicles are invaluable — especially as we’re developing next-generation EVs that are going to surprise customers and be profitable within a year of launch.”

However, with mainstream customer adoption of EVs happening at a slower rate than the industry expected, Ford said months ago that it’s deferring certain capital investments in EVs until they’re justified by demand and prospects for acceptable returns.

Looking ahead

Ford anticipates full-year adjusted EBIT of $10 billion to $12 billion and to generate $6 billion to $7 billion in adjusted free cash flow, with capital expenditures of $8 billion to $9.5 billion. The guidance presumes flat to modestly higher full-year U.S. industry volume, with overall lower vehicle pricing. Upsides include beneficial pricing and mix from 12 months of sales of the all-new Super Duty that Ford Pro introduced during 2023.

The company’s total costs are expected to be flat year-over-year, the net of factors including the
$2 billion in industrial cost improvements, offset by higher expenses for labor and major product-refresh actions.

At a segment level, the outlook is for full-year 2024 EBIT of at least $8 billion to $9 billion from Ford Pro and about $7 billion to $7.5 billion from Ford Blue; an EBIT loss of $5.0 billion to $5.5 billion for Ford Model e; and earnings before taxes of about $1.5 billion from Ford Credit.


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