Ford Motor Co. (F, Financial) released its fourth-quarter 2020 results on Feb. 4 after the market closed.
Earnings surpassed Wall Street's expectations as sales of highly lucrative trucks and SUVs rose in North America. Additionally, robust product line-up, disciplined pricing and continued cost actions pushed the automaker's results higher. Revenue also beat analysts' forecasts.
Quarter in review
The Michigan-based automaker recorded adjusted earnings per share of 34 cents. Automotive revenue of $33.2 billion was down from the prior-year quarter, while total revenue came in at $36 billion. Analysts had predicted a net loss of 7 cents per share on $33.89 billion in total revenue.
In North America, Ford registered an operating profit of $1.1 billion, up 53% from the year-ago quarter. The growth was attributable to the absence of expenses associated with UAW contract ratification, which was partially offset by low volume as well as mounting warranty costs.
In Europe, the company posted an operating profit of $414 million. However, the operating loss for the quarter was $105 million in South America and $66 million in China.
Update on EVs and AVs
Ford announced it will invest $22 billion through 2025 in U.S. manufacturing as part of its restructuring plan to support the production of electric vehicles. The plan includes phasing out sedans with the exception of Mustang cars. While the majority of the investment would go towards production of all-electric vehicles, a portion of the same would be dedicated towards production of hybrid and plug-in hybrid cars having traditional internal combustion engines.
The company said it will invest an additional $7 billion on autonomous vehicles. In the earnings release, Ford's CEO Jim Farley commented:
"The transformation of Ford is happening and so is our leadership of the EV revolution and development of autonomous driving. We are accelerating all our plans – breaking constraints, increasing battery capacity, improving costs and getting more electric vehicles into our product cycle plan. People are responding to what Ford is doing today, not someday."
Guidance
Ford anticipates adjusted pretax profits to fall within the $8 billion to $9 billion range. This is inclusive of $0.9 billion non-cash gain as a result of its investment in electric vehicle startup Rivian. Adjusted free cash flow is estimated to be between $3.5 billion and $4.5 billion. Factoring in the effect of worldwide semiconductor chip shortage needed for F-150 production, the company said its earnings could fall down by around $1 billion to $2.5 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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