Ford Motor is scheduled to report its earnings on Thursday evening, and while the quarterly results are important, the focus might shift to other significant developments. Recently, the auto giant reached a provisional agreement with its striking union, adding another layer of anticipation to the upcoming conference call.
Financial Projections
In terms of financial projections, Wall Street analysts anticipate an operating profit of $2.6 billion and earnings per share of 46 cents from sales totaling $43.9 billion. Comparatively, in the third quarter of 2022, Ford’s operating profit stood at $1.8 billion with earnings per share of 30 cents from sales amounting to $39.4 billion. However, it is worth noting that supply-chain challenges have impacted Ford’s production at various points throughout 2022.
Furthermore, Ford has provided a full-year guidance for operating profit, estimating it to be in the range of $11 billion to $12 billion. Analysts are modeling this figure at $11.2 billion. Last year, Ford reported an operating profit of $10.4 billion.
Potential Resolution of Strike
On Wednesday, Ford (ticker: F) and the United Auto Workers announced that they have reached a tentative agreement that could potentially end the ongoing strike, which commenced on September 15. However, it is important to mention that the deal still requires approval from the union members through voting.
Impact of General Motors
It is also noteworthy that investors’ expectations for Ford are influenced by General Motors’ (GM) recent developments. Just this Tuesday, GM reported a better-than-expected operating profit for the third quarter. However, they did revise some of their electric vehicle goals, thereby creating an additional element of uncertainty for the industry.
As we await the conference call scheduled at 5 p.m. Eastern time, it will be interesting to hear management’s perspective and gain further insights into Ford’s performance and strategic outlook.
GM’s EV Production Plans
General Motors (GM) is ramping up its electric vehicle (EV) production plans. The company aims to produce approximately 100,000 EVs in the second half of 2023 and a cumulative total of 400,000 between 2022 and 2024. CFO Paul Jacobson has emphasized GM’s commitment to evaluating EV demand and adjusting production schedules to ensure maximum profitability. In fact, GM has set an ambitious goal of manufacturing one million EVs by the end of 2025.
Strong EV Demand in the U.S.
Although GM’s progress hasn’t been as smooth as anticipated, the demand for EVs remains strong. In the third quarter of this year, total battery electric vehicle (BEV) sales in the U.S. reached around 313,000 units, representing an almost 50% year-over-year increase. BEVs also accounted for a record-breaking 8% of all new car sales in the U.S.
Comparatively, GM’s U.S. BEV sales experienced a year-over-year growth of approximately 33%, but they only made up about 3% of its total sales volume. Ford, on the other hand, witnessed a 15% year-over-year growth in U.S. BEV sales during the same period, constituting about 4% of its overall sales volume.
Ford’s EV Business and Labor Contract Impact
Investors are eager to understand Ford’s plans for managing its EV business. Additionally, they want insights into how a new labor contract will affect the profitability and competitiveness of Ford’s EV operations and the company as a whole.
Recently, Ford’s stock performance has been underwhelming, with a decline of about 10% over the past 12 months. In contrast, the S&P 500 and Dow Jones Industrial Average recorded gains of approximately 9% and 4%, respectively.
Labor-related issues, particularly news regarding the UAW (United Automobile Workers) union, have significantly influenced investors’ sentiment towards Ford stock. Since the beginning of July, Ford’s stock has fallen by about 25%. Concurrently, the S&P 500 experienced a decline of around 6% during the same period.
