Ford stock fell more than 7% following weak quarterly results, due to poor operational execution
Ford’s fourth-quarter and full-year 2022 operating results were below its expectations, as presented in company’s press release, but the company is optimistic about what’s possible now with three distinct, customer-focused business segments: Ford Blue for gas and hybrid vehicles, Ford Model E for electric vehicles, and Ford Pro for products and services.
For the fourth-quarter and all of 2022, Ford revenue reached $44.0 billion (+17%) and $158.1 billion (+16%), respectively. For the same periods, the company had net income of $1.3 billion and a net loss of $2.0 billion, and adjusted EBIT of $2.6 billion and $10.4 billion.
The results were below Ford’s expectations, attributable, in part, to execution issues in an environment with supply chain and production instability, resulting in higher costs and lower-than-planned volumes.
Operating cash flow for the year was $6.9 billion; full-year adjusted free cash flow was $9.1 billion. The company ended 2022 with a continued strong balance sheet: $32 billion in cash and $48 billion of liquidity.
“We should have done much better last year,” said President and CEO Jim Farley. “We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.”
The company declared a first-quarter regular dividend of 15 cents per share and a supplemental dividend of 65 cents per share. In addition to strong cash flow, the supplemental dividend reflects monetization of Ford’s stake in Rivian, which began last May and now is nearly complete. The dividends are payable March 1 to shareholders of record at the close of business on Feb. 13.
Stock price fell as much as 7% during the trading session, but finished the week with 1% gain.
In 2023, Ford currently expects to earn $9 billion to $11 billion in adjusted EBIT, presuming seasonally adjusted annual rates of about 15 million vehicles in the U.S. and about 13 million in Europe.
The company anticipates generating about $6 billion in adjusted free cash flow, which assumes no distributions from Ford Credit. Behind those estimates is a variety of likely tradeoffs:
• Headwinds including mild recession in the U.S. and moderate recession in Europe; higher industrywide customer incentives, as vehicle supply-and-demand rebalances; a lower profit from Ford Credit; a continued strong U.S. dollar; and growth-related investments, e.g., in customer experience, connected services and capital expenditures,
• Tailwinds like supply chain improvements and higher industry volumes; launch of the all-new Super Duty truck; and lower costs of goods sold, including for materials, commodities, logistics and other parts of the industrial platform.