Ford Motor Co. (F, Financial) released its first-quarter results on April 28 after the market closed. Earnings and revenue could not live up to analysts' expectations.as the coronavirus pandemic disrupted the company’s operations.
Overview of the quarter
The Michigan-based automaker recorded an adjusted loss per share of 23 cents. Automotive revenue of $31.34 billion was down from the prior-year quarter. Analysts had predicted a net loss of 10 cents per share on $32.7 billion in revenue.
Ford’s pickup trucks showed resilience amid the pandemic as sales were down a mere 5.4% in the reported quarter compared with a drop of 36% in car sales and 11% in SUV sales.
Segment performance
In North America, Ford registered operating profit of $0.3 billion, down $1.9 billion from the year-ago quarter. The decline was attributable to low volume as well as mounting warranty costs.
The operating loss for the quarter was $0.1 billion in South America, $0.1 billion in Europe and $0.2 billion in China.
Key insights
Ford posted a loss of $2 billion in the first quarter, citing the Covid-19 pandemic. In fact, the company said it is expecting an incremental $5 billion loss in the second quarter for the same reason.
Given its strong cash position of $35 billion, Chief Financial Officer Tim Stone said the company will be "able to invest and sustain the business through the end of the year, even if there is no production and wholesales, which we don’t expect to be case.”
To keep up with the changing auto environment, Ford is investing $11 billion in electric and autonomous vehicles as part of its restructuring plan. The plan includes phasing out sedans with the exception of Mustang cars. Stone said that the ongoing pandemic does not affect its restructuring plans.
Guidance
The company did not issue 2020 guidance, citing the fluctuation of the economic environment amid the coronavirus outbreak.
Disclosure: I do not hold any positions in the stocks mentioned.
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