Investors have been disappointed by Ford's latest results and outlook, particularly compared with GM's upbeat forecast. By Jonty Storey

Ford reported a weaker than expected set of results for Q4 2022 and forecast a difficult year ahead. Investors were disappointed by the results and outlook, sending the share price down by 6%. The disappointment was all the greater when Ford’s results were compared with GM’s upbeat assessment of the outlook for 2023 a few days earlier.

Ford Q4 & full-year 22 (% change y-o-y)

Group revenue rose by 16.8% in Q4 2022 to US$44bn, as wholesale volumes rose 3.8% above the year-ago level but remained some 15% below the Q4 2019 (pre-COVID) result. The company said that Q4 volumes were some 100,000 units below forecast due to continuing supply constraints (i.e. the chip shortage). Partly as a consequence of those constraints, Ford continued to benefit from strong pricing and a rich sales mix in most regions, though the favourable impact in overseas markets was partly offset by weaker currencies.

Reported operating profit rose to US$4.4bn from US$264m in Q4 2021 and the margin improved to 10.0% from 0.7%. Pre-tax income fell by 90% to US$1.17bn, brought lower mainly by the non-recurrence of the previous year’s US$8.2bn gain in respect of the stake in Rivian.

The company reported Q4 group recurring Ebit of US$2.6bn, up 24%. Recurring automotive Ebit was US$2.8bn, up 69%. Nearly all the automotive earnings came from the North American operation which contributed US$3.0bn, followed by International operations at US$0.2bn and South America at US$0.1bn. These were partly offset by a loss of US$(0.2)bn in the Chinese operation and US$(0.4)bn in Europe.

Ford operating margin (%)

Over the full year group revenue grew by 15.9% to US$158bn as wholesales rose by 7.3% to 4.23 million units. Reported operating profit was 39% higher at US$6.28bn, a margin of 4.0%, up 0.7pts.

Full-year group recurring Ebit was US$10.4bn, up 4% as gains on the automotive side were mostly offset by a weaker performance by Ford Credit.

Recurring automotive Ebit was 31% higher at US$9.7bn. The recurring figure excludes net non-recurring costs of US$12.2bn of which the main components were a US$7.4bn loss on the Rivian investment (following a US$9.1bn gain in 2021) and a US$2.8bn write-down in respect of Argo AI, the autonomous vehicle unit which Ford shut down in late October.

In North America recurring Ebit was 24% higher at US$9.2bn, a margin of 8.4% as the favourable impact of higher net pricing and increased volume, was partly offset by cost increases.

The International Markets Group earned more than US$600m, helped by the launch of the all-new Ranger pick-up. In South America, recurring Ebit exceeded US$400m and in Europe was slightly above break-even, but below forecast. In China there was a recurring loss of about US$600m.

Ford results

Ford Unit

Yr to Dec 22

Q4-22 9Mo-22 Q3-22

H1-22

Group   Data % Data % Data % Data % Data %
Revenue $mil 158,057 15.9 43,999 16.8 114,058 15.6 39,392 10.4 74,666 18.6
Op. profit $mil 6,276 38.8 4,397 1,566 1,879 (55.9) 504 (62.4) 1,375 (52.9)
Pre-tax profit $mil (3,016) (117.0) 1,166 (89.6) (4,182) (164) (1,125) (159.7) (3,057) (165)
Net profit $mil (2,152) (112.0) 1,259 (89.7) (3,411) (161) (930) (151) (2,481) (165)
Employees 000’s 173 (5.5) 173 (5.5) 176 (5.4) 176 (5.4) 182 201.0
Unit wholesales 000’s 4,231 7.3 1,147 3.8 3,084 8.7 1,086 7.3 1,998 9.5
N. America 000’s 2,335 16.4 635 5.8 1,700 20.9 568 4.0 1,132 31.6
S. America 000’s 82 1.2 26 4.0 56 0.0 23 15.0 33 (8.3)
Europe 000’s 1,015 11.2 266 13.2 749 10.5 273 25.2 476 3.5
Asia Pacific / Africa 000’s 799 (15.2) 220 (10.2) 579 (16.9) 222 (2.6) 357 (23.9)
Per unit
Revenue $ 37,357 8.0 38,360 12.5 36,984 6.3 36,273 2.9 37,370 8.3
Op. profit $ 1,483 29.3 3,833 1,505 609 (59.4) 464 (65.0) 688 (56.9)
Pre-tax profit $ (713) (115.8) 1,017 (90.0) (1,356) (158.6) (1,036) (155.6) (1,530) (160)
Net profit $ (509) (111.2) 1,098 (90.1) (1,106) (155.7) (856) (147.6) (1,242) (159)
Per employee
Revenue $ 913,624 22.6 254,329 23.5 648,057 22.2 223,818 16.7 410,253 21.2
Op. profit $ 36,277 46.8 25,416 1,662 10,676 (53.4) 2,864 (60.3) 7,555 (51.8)
Pre-tax profit $ (17,434) (118) 6,740 (89.0) (23,761) (167) (6,392) (163) (16,797) (167)
Net profit $ (12,439) (113) 7,277 (89.1) (19,381) (164) (5,284) (154) (13,632) (166)
Sales units 24.5 13.5 6.6 9.8 17.5 14.9 6.2 13.4 11.0 11.9
Return on revenue
Op. profit % 4.0 0.7 10.0 9.3 1.6 (2.7) 1.3 (2.5) 1.8 (2.8)
Pre-tax profit % (1.9) (14.9) 2.7 (27.1) (3.7) (10.3) (2.9) (8.1) (4.1) (11.5)
Net profit % (1.4) (14.5) 2.9 (29.7) (3.0) (8.7) (2.4) (7.5) (3.3) (9.4)
Revenue by division
N. America $mil 108,700 23.8 30,987 20.1 77,713 25.4 26,340 9.6 51,373 35.3
S. America $mil 3,100 29.2 939 18.3 2,161 34.6 883 40.8 1,278 30.7
Europe $mil 25,600 4.6 6,172 7.5 19,428 3.7 6,757 11.4 12,671 0.1
Asia Pacific / Africa $mil 11,580 0.7 3,668 25.1 7,912 (7.7) 3,214 29.3 4,698 (22.8)
Automotive $mil 148,980 18.1 41,766 18.5 107,214 18.0 37,194 12.0 70,020 21.4
Mobility $mil 99 (21) 120 11 109
Financial svcs $mil 8,978 (10.9) 2,254 (5.0) 6,724 (12.7) 2,187 (10.1) 4,537 (13.8)

The company is targeting group recurring Ebit of US$9-11bn for 2023, i.e. little changed from 2022. Like GM, Ford is forecasting an 8% rise in US demand to 15 million units. The company anticipates a mild recession in the US and moderate recession in Europe; a return to higher incentives, as supply-constraints ease; lower profit from Ford Credit; and a continued strong US dollar.

These negative factors are expected to be at least partly offset by supply chain improvements, higher industry volumes, the launch of the all-new Super Duty truck and lower costs of goods sold, including for materials, commodities and logistics.

Keyword: Ford Q4 2022 results

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