The US carmaker Ford Motor Co, which has been hit by losses in its electric vehicle business and rising labor costs, reported fourth-quarter 2023 results that beat analysts’ expectations and now forecasts profit growth for the current year year
The automaker reported adjusted earnings of 29 cents per share, more than double the 13 cents per share expected by analysts. Fourth-quarter revenue came in at 46 billion USD, eclipsing market estimates of 40.3 billion USD.
“We are nowhere near our earnings potential”, said the Ford Chief Executive Jim Farley.
As sales of electric vehicles slow, Farley is trying to cut the company’s 12 billion USD in costs to produce electric cars while supporting the construction of conventional models with internal combustion engines that provide the better returns needed to the financing of electrification.
For the current year, Ford forecasts earnings before interest and taxes of 10 billion USD to 12 billion USD, compared with 10.4 billion USD in 2023. That result falls at the upper end of the range of 10 billion USD to 10.5 billion USD in the forecast. the company since November, when it lowered its guidance following a six-week strike by the United Auto Workers (UAW).
As part of this drive to extract better profitability, the manufacturer plans to cut costs by 2 billion USD, targeting areas such as materials, supplies and manufacturing operations.
The automaker is giving investors an additional dividend of 18 cents per share in addition to the regular quarterly dividend of 15 cents per share, both payable on March 1.
Ford has cut production of the F-150 Lightning electric pickup in half while ramping up assembly of its highly profitable Bronco and Ranger models.
The automaker lost 4.7 billion USD on electric vehicle business last year, more than the .5 billion USD deficit forecasted in July. In the fourth quarter, Ford’s electric car division, known as the Model e, reported a loss of 1.57 billion USD, beating analysts’ expectations of a loss of 1.34 billion USD.
Ford predicts that losses from its electric car business will rise to 5.5 billion USD this year.
Chief Financial Officer John Lawler told analysts that the company no longer expects to meet its 8% EV margin goal in the next few years.
A negative financial result on Ford’s electric vehicles for 2023 translates into a loss of about $28,000 for every battery-powered vehicle the company sells, Bloomberg Intelligence’s Joel Levington estimates, adding that those losses are “unsustainable”.
Optimism is brought by the hybrid models that Ford is moving towards in response to strong consumer demand. Jim Farley says he expects hybrid car sales to grow 40% this year, following a 25% increase the previous year.
