Investors have been disappointed by Ford’s latest results and outlook, particularly compared with GM’s upbeat forecast. By Jonty Storey
Ford reported a weaker than expected set of results for Q4 2022 and forecast a difficult year ahead. Investors were disappointed by the results and outlook, sending the share price down by 6%. The disappointment was all the greater when Ford’s results were compared with GM’s upbeat assessment of the outlook for 2023 a few days earlier.
Ford Q4 & full-year 22 (% change y-o-y)
Group revenue rose by 16.8% in Q4 2022 to US$44bn, as wholesale volumes rose 3.8% above the year-ago level but remained some 15% below the Q4 2019 (pre-COVID) result. The company said that Q4 volumes were some 100,000 units below forecast due to continuing supply constraints (i.e. the chip shortage). Partly as a consequence of those constraints, Ford continued to benefit from strong pricing and a rich sales mix in most regions, though the favourable impact in overseas markets was partly offset by weaker currencies.
Reported operating profit rose to US$4.4bn from US$264m in Q4 2021 and the margin improved to 10.0% from 0.7%. Pre-tax income fell by 90% to US$1.17bn, brought lower mainly by the non-recurrence of the previous year’s US$8.2bn gain in respect of the stake in Rivian.
The company reported Q4 group recurring Ebit of US$2.6bn, up 24%. Recurring automotive Ebit was US$2.8bn, up 69%. Nearly all the automotive earnings came from the North American operation which contributed US$3.0bn, followed by International operations at US$0.2bn and South America at US$0.1bn. These were partly offset by a loss of US$(0.2)bn in the Chinese operation and US$(0.4)bn in Europe.
Ford operating margin (%)
Over the full year group revenue grew by 15.9% to US$158bn as wholesales rose by 7.3% to 4.23 million units. Reported operating profit was 39% higher at US$6.28bn, a margin of 4.0%, up 0.7pts.
Full-year group recurring Ebit was US$10.4bn, up 4% as gains on the automotive side were mostly offset by a weaker performance by Ford Credit.
Recurring automotive Ebit was 31% higher at US$9.7bn. The recurring figure excludes net non-recurring costs of US$12.2bn of which the main components were a US$7.4bn loss on the Rivian investment (following a US$9.1bn gain in 2021) and a US$2.8bn write-down in respect of Argo AI, the autonomous vehicle unit which Ford shut down in late October.
In North America recurring Ebit was 24% higher at US$9.2bn, a margin of 8.4% as the favourable impact of higher net pricing and increased volume, was partly offset by cost increases.
The International Markets Group earned more than US$600m, helped by the launch of the all-new Ranger pick-up. In South America, recurring Ebit exceeded US$400m and in Europe was slightly above break-even, but below forecast. In China there was a recurring loss of about US$600m.
Ford results
| Ford | Unit |
Yr to Dec 22 |
Q4-22 | 9Mo-22 | Q3-22 |
H1-22 |
|||||
| Group | Data | % | Data | % | Data | % | Data | % | Data | % | |
| Revenue | $mil | 158,057 | 15.9 | 43,999 | 16.8 | 114,058 | 15.6 | 39,392 | 10.4 | 74,666 | 18.6 |
| Op. profit | $mil | 6,276 | 38.8 | 4,397 | 1,566 | 1,879 | (55.9) | 504 | (62.4) | 1,375 | (52.9) |
| Pre-tax profit | $mil | (3,016) | (117.0) | 1,166 | (89.6) | (4,182) | (164) | (1,125) | (159.7) | (3,057) | (165) |
| Net profit | $mil | (2,152) | (112.0) | 1,259 | (89.7) | (3,411) | (161) | (930) | (151) | (2,481) | (165) |
| Employees | 000’s | 173 | (5.5) | 173 | (5.5) | 176 | (5.4) | 176 | (5.4) | 182 | 201.0 |
| Unit wholesales | 000’s | 4,231 | 7.3 | 1,147 | 3.8 | 3,084 | 8.7 | 1,086 | 7.3 | 1,998 | 9.5 |
| N. America | 000’s | 2,335 | 16.4 | 635 | 5.8 | 1,700 | 20.9 | 568 | 4.0 | 1,132 | 31.6 |
| S. America | 000’s | 82 | 1.2 | 26 | 4.0 | 56 | 0.0 | 23 | 15.0 | 33 | (8.3) |
| Europe | 000’s | 1,015 | 11.2 | 266 | 13.2 | 749 | 10.5 | 273 | 25.2 | 476 | 3.5 |
| Asia Pacific / Africa | 000’s | 799 | (15.2) | 220 | (10.2) | 579 | (16.9) | 222 | (2.6) | 357 | (23.9) |
| Per unit | |||||||||||
| Revenue | $ | 37,357 | 8.0 | 38,360 | 12.5 | 36,984 | 6.3 | 36,273 | 2.9 | 37,370 | 8.3 |
| Op. profit | $ | 1,483 | 29.3 | 3,833 | 1,505 | 609 | (59.4) | 464 | (65.0) | 688 | (56.9) |
| Pre-tax profit | $ | (713) | (115.8) | 1,017 | (90.0) | (1,356) | (158.6) | (1,036) | (155.6) | (1,530) | (160) |
| Net profit | $ | (509) | (111.2) | 1,098 | (90.1) | (1,106) | (155.7) | (856) | (147.6) | (1,242) | (159) |
| Per employee | |||||||||||
| Revenue | $ | 913,624 | 22.6 | 254,329 | 23.5 | 648,057 | 22.2 | 223,818 | 16.7 | 410,253 | 21.2 |
| Op. profit | $ | 36,277 | 46.8 | 25,416 | 1,662 | 10,676 | (53.4) | 2,864 | (60.3) | 7,555 | (51.8) |
| Pre-tax profit | $ | (17,434) | (118) | 6,740 | (89.0) | (23,761) | (167) | (6,392) | (163) | (16,797) | (167) |
| Net profit | $ | (12,439) | (113) | 7,277 | (89.1) | (19,381) | (164) | (5,284) | (154) | (13,632) | (166) |
| Sales | units | 24.5 | 13.5 | 6.6 | 9.8 | 17.5 | 14.9 | 6.2 | 13.4 | 11.0 | 11.9 |
| Return on revenue | |||||||||||
| Op. profit | % | 4.0 | 0.7 | 10.0 | 9.3 | 1.6 | (2.7) | 1.3 | (2.5) | 1.8 | (2.8) |
| Pre-tax profit | % | (1.9) | (14.9) | 2.7 | (27.1) | (3.7) | (10.3) | (2.9) | (8.1) | (4.1) | (11.5) |
| Net profit | % | (1.4) | (14.5) | 2.9 | (29.7) | (3.0) | (8.7) | (2.4) | (7.5) | (3.3) | (9.4) |
| Revenue by division | |||||||||||
| N. America | $mil | 108,700 | 23.8 | 30,987 | 20.1 | 77,713 | 25.4 | 26,340 | 9.6 | 51,373 | 35.3 |
| S. America | $mil | 3,100 | 29.2 | 939 | 18.3 | 2,161 | 34.6 | 883 | 40.8 | 1,278 | 30.7 |
| Europe | $mil | 25,600 | 4.6 | 6,172 | 7.5 | 19,428 | 3.7 | 6,757 | 11.4 | 12,671 | 0.1 |
| Asia Pacific / Africa | $mil | 11,580 | 0.7 | 3,668 | 25.1 | 7,912 | (7.7) | 3,214 | 29.3 | 4,698 | (22.8) |
| Automotive | $mil | 148,980 | 18.1 | 41,766 | 18.5 | 107,214 | 18.0 | 37,194 | 12.0 | 70,020 | 21.4 |
| Mobility | $mil | 99 | – | (21) | – | 120 | – | 11 | – | 109 | – |
| Financial svcs | $mil | 8,978 | (10.9) | 2,254 | (5.0) | 6,724 | (12.7) | 2,187 | (10.1) | 4,537 | (13.8) |
The company is targeting group recurring Ebit of US$9-11bn for 2023, i.e. little changed from 2022. Like GM, Ford is forecasting an 8% rise in US demand to 15 million units. The company anticipates a mild recession in the US and moderate recession in Europe; a return to higher incentives, as supply-constraints ease; lower profit from Ford Credit; and a continued strong US dollar.
These negative factors are expected to be at least partly offset by supply chain improvements, higher industry volumes, the launch of the all-new Super Duty truck and lower costs of goods sold, including for materials, commodities and logistics.