Ford Motor released better-than-expected earnings and an upbeat forecast, attributing the improvements to cost reductions and increased profits from its commercial vehicle division, which are anticipated to outweigh the losses from electric vehicles. Additionally, the company announced a dividend payment of 18 cents per share. Automotive revenue saw a 3% year-over-year increase to $43.2 billion, surpassing analysts’ projections of $40.2 billion. Adjusted earnings-per-share (EPS) declined by 43% to 29 cents, outperforming estimates of 14 cents per share. Despite a 59% drop in earnings before interest and taxes (EBIT) to $1.05 billion, it exceeded analysts’ forecast of $936 million. In response to the positive results, Ford’s shares surged by approximately 6% in after-hours trading. The previous quarter raised concerns about Ford’s management, which seemed to have diverted its attention from operations as it prepared for the UAW strikes. During that period, Ford incurred a $1.2 billion increase in warranty-related costs, a result deemed unacceptable. This overshadowed the company’s transition to a more adaptable and flexible approach, prioritizing high-margin internal combustion engine (ICE) and hybrid vehicles while moderating investments in unprofitable EVs. The objective is clear: maximizing profits and cash flows while slowly expanding the EV business in the best interest of shareholders. As Ford addresses its quality and warranty issues, its potential for profitability in a challenging automotive industry is becoming evident. Ford Pro, with its underappreciated profit potential, has significantly contributed to this achievement. The company’s strong cash flow, combined with ongoing capital discipline, its focus on hybrids, profitability of Ford Pro, and the potential turnaround in quality control, keeps investors committed to Ford. The company’s quarterly performance revealed stable revenues for its gas-powered and hybrid vehicles, despite the impact of the UAW strike. Over the full year, revenues increased by 8% in every region, with a surge in demand for hybrids representing about 13% of Blue U.S. volumes. Ford anticipates another year of double-digit growth for hybrids in 2024. Conversely, the electric vehicle division, Ford Model e, experienced a slight increase in sales, but higher material costs and lower pricing led to widened losses, reaching $4.7 billion over the full year. However, Ford emphasized its commitment to capital optimization, ensuring lucrative investments and profitable future prospects. Ford Pro, comprising the company’s commercial vehicles, software, and services business, remained a highlight, with revenues increasing by 19% over the full year and EBIT more than doubling to $7.2 billion, achieving a margin of 12.4%. This success brings Ford closer to its mid-teen target. Looking ahead, Ford provided a positive outlook for 2024, anticipating full-year adjusted EBIT of $10 to $12 billion, surpassing consensus estimates. This optimistic forecast factors in flat to slightly higher full-year U.S. industry volume, offset by lower pricing. The company expects quality improvements and $2 billion in cost reductions in areas such as material, freight, and manufacturing to mitigate high labor and product refresh expenses. Ford’s guidance suggests a stable Blue EBIT, wider losses for Model e, and growing Pro EBIT. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.Ford CEO Jim Farley speaks at the launch of the all-new electric Ford F-150 Lightning pickup truck at the Ford Rouge Electric Vehicle Center on April 26, 2022 in Dearborn, Michigan. The F-150 Lightning is positioned to be the first full-size all-electric pickup truck to go on sale in the mainstream U.S. market. Bill Pugliano | Getty ImagesFord Motor delivered an earnings beat Tuesday, along with a stronger-than-expected outlook as cost cuts and higher profits from its commercial car business are expected to more than offset the losses from electric vehicles. The cherry on top: Management announced a supplemental dividend of 18 cents per share.
