Updated at 10:01 am EST
Ford Motor (F) – Get Ford Motor Company Report shares moved firmly higher Thursday after the carmaker reported stronger-than-expected second quarter earnings, while confirming its full-year profit guidance, even as it cautioned on surging costs.
Ford said its adjusted earnings for the June quarter rose more than five-fold from last year to 68 cents per share, well ahead of Street forecasts, as price increases offset input cost pressures and currency headwinds. Group revenues, Ford said, surged 66.5% to $40.22 billion, with first half free-cash flow estimated at around $3 billion.
The group also lifted its quarterly dividend to 15 cents per share, taking the payout level back to pre-pandemic levels.
Ford said in late April that pricing power and robust demand, particularly for its just-launched F-150 Lightning, would offset supply constraints and the impact of Russia’s war on Ukraine as it stuck to its full-year operating earnings forecast of between $11.5 billion and $12.5 billion. Ford reiterated that forecast following last night’s earnings.
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“We remain clear-eyed and determined to move with speed and determination on a Ford+ transformation,” CEO Jim Farley told investors on a conference call last night, referencing the group’s $50 transition into EV production that has included cost and job cuts.
“Traditionally, the auto industry has cut costs, often indiscriminately. As an effect, of course, from lower auto demands through economic softness and shift for customer preferences,” he added. “What we’re undertaking forward is totally different than that. And yet, cost reduction will happen in our ICE business because that’s primarily what is made up of Ford today.”
Ford shares were marked 4.1% higher in early Thursday trading to change hands at $13.70 each.
“In our view, the need to replenish inventory levels globally, an improved cost position, competitive products, a strong balance sheet, and positive underlying demand trends have positioned Ford and the auto sector to outperform the global economy over the next 12-24 months,” said Benchmark analyst Michael Ward, who carries a ‘buy’ rating with a $25 price target on Ford stock.
Rival General Motors (GM) – Get General Motors Company Report said Tuesday it would slow hiring and cut spending as it prepared for what could be weaker demand over the final half of the year following weaker-than-expected second quarter earnings.
GM repeated its view that adjusted 2022 earnings will come in between $6.50 and $7.50 per share, or $13 billion to $15 billion, with adjusted automotive free-cash flow from operations of between $7 billion and $9 billion.
Earlier this month, GM said supply chain disruptions lead to production delays that impacted around 100,000 vehicles which were missing certain components that will delay their ultimate sale.