Ford slides as CEO says $2 billion profit left ‘on table’

Bloomberg

Ford Motor Co. shares tumbled the most in four months after the carmaker missed earnings expectations, blaming poor execution and continued supply shortages.
The results show Ford is struggling to balance the transition to electric cars from combustion vehicles. The company is counting on strong sales of gas-burning F-Series pickups and Bronco sport utility vehicles to help foot the $50 billion that CEO Jim Farley has committed to developing and building EVs.
The automaker reported fourth-quarter profit excluding some items of 51 cents a share, short of the 62-cent average of analysts’ estimates. On that basis, earnings before interest and taxes came to $2.6 billion.
Ford is expanding its cost-cutting efforts, now looking to eliminate “considerably more” than the $3 billion in annualised expenses previously targeted by mid-decade, Chief Financial Officer John Lawler told reporters on a call.
Additional job cuts will be part of that, he said. In August, Ford eliminated about 3,000 positions, most of which were in the US, and the German union IG Metall warned last month that it’s expecting about 3,200 more jobs will be cut across Europe.
In an interview with David Westin on Bloomberg TV, Lawler said “everything is on the table” when asked about headcount reductions.
Ford faces about $5 billion worth of headwinds this year, Lawler said, listing factors ranging from lower profit from its lending unit to higher spending on incentives. He expects Ford’s pricing to be “flattish” even as average new-vehicle prices drop around 5%.
Ford anticipates a “mild” recession in the US this year and a “moderate” one in Europe.
For this year, Ford forecast adjusted earnings of $9 billion to $11 billion before interest and taxes, compared with an average estimate of $9.94 billion. The company earned $10.4 billion on that basis in 2022.
Ford aims to increase production of EVs to 600,000 annually by the end of this year and reach a 2-million-vehicle yearly run rate by the end of 2026.
But with competition in the EV segment accelerating and growth slowing, Ford was forced to slash prices on its plug-in pony car, the Mustang Mach-E, in response to deep price cuts by market leader Tesla Inc.
Ford’s revenue in the fourth quarter increased 17% to $44 billion, beating the $39.8 billion that analysts expected. Fourth-quarter revenue at General Motors Co. totaled $43.1 billion, while Tesla posted $24.3 billion.
Ford more than doubled sales of EVs in the US last year and fortified its position as the No. 2 seller of battery-powered models, behind Tesla, which controls almost two-thirds of the American EV market.