Autos

Ford shares fall after fourth-quarter earnings significantly miss Wall Street's expectations

Key Points
  • Ford shares slid after it reported fourth-quarter earnings Thursday that significantly missed Wall Street's earnings expectations and slightly missed on revenue.
  • For 2022, Ford estimates it will earn between $11.5 billion and $12.5 billion in adjusted pretax profits and generate between $5.5 billion to $6.5 billion in adjusted free cash flow.

In this article

Ford Motor Co. signage at the Washington Auto Show in Washington, D.C., Jan. 21, 2022.
Al Drago | Bloomberg | Getty Images

DETROIT — Ford Motor's shares slid after it reported fourth-quarter earnings Thursday that significantly missed Wall Street's earnings expectations and slightly missed on revenue.

The company's shares tumbled by more than 6% in after-hours trading. The stock closed Thursday at $19.89 a share, down by 3.6%.

Here's how Ford performed in the fourth quarter, compared with analysts' estimates as compiled by Refinitiv:

  • Adjusted EPS: 26 cents vs 45 cents a share expected
  • Automotive revenue: $35.3 billion vs $35.5 billion expected

While the automaker hit its annual earnings guidance for 2021, it missed production targets analysts were expecting due to supply chain problems, including an ongoing shortage of semiconductor chips, Ford CFO John Lawler told media during a call Thursday.

For the quarter, Ford's North American operations, as they have been, contributed the most to the automaker's earnings, up by 68% to $1.8 billion compared to a year earlier. International losses included $150 million in China, down 130%, and $159 million, a 139% decline, in Europe.

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The automaker's fourth-quarter net income swung to a $12.3 billion profit from a $2.8 billion loss during the last three months of 2020. That included an $8.2 billion gain on its investment in electric vehicle start-up Rivian Automotive. After backing out that and other items, like taxes, Ford's adjusted earnings came to $2.0 billion for the fourth quarter.

Its stake in Rivian also pumped full-year net income to $17.9 billion, while its operating profit was $10 billion. Lawler told investors Thursday that the investment could result in volatility in its future results. Ford owns about 12% of Rivian.

Outlook

For 2022, Ford estimates it will earn between $11.5 billion and $12.5 billion in adjusted pretax profits, up 15% to 25% over 2021, and generate between $5.5 billion to $6.5 billion in adjusted free cash flow.

"We're bullish on 2022," Lawler said, "even with persistent supply chain uncertainties that again illustrates the growing strength of our underlying business."

The expected increase in earnings comes as constraints of the chip shortage is expected to ease throughout the year. Ford and other automakers were forced to sporadically shutter plants and depleted vehicle inventories due to the lack of chips.

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The automaker said it expects to spend between $7 billion and $8 billion, up from $6.2 billion in 2021, as Ford executes CEO Jim Farley's Ford+ turnaround plan and accelerates its transition to electric vehicles. That includes launches of electric versions of the Transit cargo van and F-150 pickup.

Ford had $36.5 billion in cash and investments to end last year, including $10.6 billion in its Rivian stake. However, that valuation is based on Rivian's stock at $103.69 per share. The stock closed Thursday at $60.36 a share.

Lawler said a second-quarter launch for the electric F-150 Lightning remains on track, with the company halting reservations of the vehicle after hitting 200,000 units.

Production

Ford expects vehicle wholesale volumes, which are closely correlated with production,  to increase by 10% to 15%, up from a previous guidance of 10%, according to Lawler.

Analysts estimate Ford this year will earn between $1.54 and $2.35 per share on revenue of $147.5 billion, according to Refinitiv.

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Ford sold 1.9 million vehicles in the U.S. in 2021, down by 6.8% as it managed through a global shortage of semiconductor chips. The parts problem forced Ford and other automakers to sporadically shutter plants and depleted vehicle inventories.

After increasing by roughly 140% in 2021, shares of Ford are down by about 4% this year.