Ford hikes shareholder payouts, predicts large profit increase despite UAW deal costs | CNN Business

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Ford F-150 Lightning electric pickup trucks sit on the production line in Dearborn, Michigan. Ford announced a supplemental dividend for shareholders and said it might be able to hit record profits in 2024.

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Last autumn, Ford agreed to a significant pay raise for striking members of the United Auto Workers union. On Tuesday, the company decided to give its shareholders an even more substantial pay boost.

The company unveiled that it would provide shareholders with a second, extra dividend that will surpass the regular dividend they typically receive. The standard dividend stands at 15 cents per share, while the special dividend is set at 18 cents per share.

Ford’s earnings lowered in the fourth quarter due to the expense of the strike that commenced in the final two weeks of the third quarter and persisted through most of October. The company stated that its adjusted earnings totaled $1.2 billion, a decrease from $2.1 billion at the end of 2022.

Despite the decrease in fourth-quarter earnings, the full-year earnings at Ford climbed to $8.1 billion from $7.6 billion in 2022. This means that the average profit sharing check for the 58,000 UAW members at Ford will amount to $10,416, an increase from $9,176 a year prior.

However, the company foresees adjusted earnings before interest and taxes in 2024 to range between $10 billion and $12 billion. The upper limit of this range would mark record profits by that measure for the company, according to Ford CFO John Lawler.

“We are far from reaching our earnings potential for Ford Motor,” CEO Jim Farley informed investors on Tuesday evening.

The company affirmed during the strike that it could not meet the demands of the United Auto Workers union, with Farley even arguing that complying with the union demands would drive Ford into bankruptcy.

Although the union did not achieve all its demands at the start of the strike, it did secure immediate pay raises of at least 11% for its members at the company and an additional 14 percentage points of guaranteed pay hikes over the 4-1/2 year life of the contract. It also granted workers a cost-of-living adjustment to protect them from the impact of rising prices.

Ford is the second automaker to boost payouts to shareholders since reaching the deal with the UAW. In November, GM disclosed a $10 billion share repurchase and a 33% dividend raise.

Ford’s shares surged more than 6% in after-hours trading following the earnings report, guidance, and news of the dividend.

Author: OpenAI