The automaker easily beats Q4 revenue. Earnings forecast for 2024 exceeds expectations

Ford (F) stock rose hours after the automaker reported fourth-quarter sales that easily beat expectations and forecast full-year earnings forecasts that beat estimates, though the company still sees further losses for its electric vehicle unit.

These results come after General Motors (GM) announced strong earnings and earnings guidance last week, indicating strength in the US auto sector overall.

Ford reported total revenue of $46 billion versus $40.35 billion in Bloomberg estimates, which is $2 billion more than last year despite the lingering effects of the United Auto Workers (UAW) strike early in the fourth quarter.

In terms of profitability, Ford reported adjusted earnings per share of $0.29 versus $0.13 estimated, on adjusted EBIT of $1.1 billion, versus $988.2 million expected.

Shares of the automaker rose more than 6% in premarket trading on Wednesday.

For the year, Ford generated adjusted EBIT of $10.3 billion, at the high end of its 2023 adjusted EBIT forecast of $10 billion to $10.5 billion (which includes $1.7 billion of lost earnings related to… by strike). Ford has revised its 2023 earnings forecast after ratifying its labor agreement with the UAW.

As for its full-year outlook for 2024, Ford expects adjusted EBITDA to range from $10 billion to $12 billion — lower than Ford's pre-UAW strike 2023 earnings forecast of $11 billion to $12 billion, but Higher than estimates of $9.24 billion. Ford rival General Motors issued 2024 earnings guidance that matches its initial forecast before the 2023 UAW strike.

“Guidance assumes U.S. industry volumes flat to modestly higher for the full year, with overall vehicle prices declining,” the company said in a statement.

Ford also declared a first-quarter regular dividend of $0.15 per share and a supplemental dividend of $0.18 per share.

Ford CFO John Lawler said in a statement that Ford will improve capital efficiency by selectively reducing investments and “raising the bar” on expected returns on new initiatives.

The story continues

“The goal is to improve the adjusted total return on invested capital from about 14% in 2023 to 20% over the next two years,” Lawler said. “Simply, 'good' is not good enough, and investments are going to projects that have reliable plans to achieve their targeted returns.”

Last year, Ford split into three business units: Ford Blue for its conventional gas business, Ford Model e for its electric vehicle division, and Ford Pro for its commercial and Super Duty truck business. Across these business lines, here's what Ford reported for the fourth quarter:

Ford Blue

Ford Model E

Ford Pro

For the year, Ford's Model e unit posted an EBIT loss of $4.7 billion, which the company said reflects a “highly competitive pricing environment, coupled with strategic investments in developing next-generation clean electric vehicles.”

For 2024, Ford expects the Model e unit to post an EBIT loss of between $5 billion and $5.5 billion — indicating larger losses in the business unit than in 2023.

“We think there has been a dramatic change in the last six months,” Ford CEO Jim Farley said on a conference call about the U.S. electric vehicle market, where customers are balking at high prices. Farley said that investing in electric vehicles this year will fund the development of the next generation of electric vehicles.

“Our upcoming second-generation products will be profitable in the first 12 months of launch,” Farley said, also noting that the company will focus more on making smaller electric products that will be profitable.

Farley has also revealed over the past two years that Ford has a team internally working on making a low-cost electric vehicle platform, suggesting a competitor to Tesla's upcoming $25,000 car.

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Earlier in January, Ford moved 1,400 workers from F-150 Lightning EV production and cut the shift as the company adjusted supply in what appeared to be slowing demand for the heavily reviewed but hefty-priced electric pickup. “We're still seeing growth, but at a slower pace. We're adjusting to that growth,” Ford Model e spokesman Martin Gunsberg told Yahoo Finance.

Regarding the Ford Model e business, in the fourth quarter, Ford said the company would “push” $12 billion in electric vehicle investments when that capability is needed. Ford also delayed construction of its new battery plant in Michigan (which will use technology licensed from Chinese company CATL) and reduced battery production. The factory is still scheduled to open in 2026.

Ford also saw a decline in sales of its electric vehicles in January of this year, with electric vehicle sales falling by more than 10%, mainly due to lower sales of the Mustang Mach-E, which lost its eligibility for the federal electric vehicle tax credit in the first year. From January. However, overall car sales are rising, with hybrid car sales jumping more than 40%. Ford said it will push to bring more hybrid vehicles to the market to meet customer demand.

Ford's strength in January was a continuation of what the automaker saw in 2023 as well. Last month, the company reported that total U.S. sales jumped 7.1% to nearly 1,995,912 vehicles, making 2023 the best year for the Dearborn-based automaker since 2020. Ford noted strong sales in its truck business, where 1,081,777 trucks and vans were sold in 2023 – an increase of 13%. . Across its nameplates, Ford saw notable growth in Bronco Sport (up 28.1%), Edge (up 24.1%), Lincoln Navigator (up 32.9%), and others.

Ford's hybrid and electric vehicle sales were also highlights, with sales rising 25.3% and 17.9% in 2023, respectively.

Farley also noted on the conference call that he believes 25% of all F-150 pickup sales could be hybrids in the near future, and that the company is currently building hybrids “at full capacity.”

Correction: A previous version of this article misspelled the first name of Ford CFO John Lawler. We apologize for this error.

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

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