Ford earnings tumbled in the third quarter but beat subdued expectations, amid supply-chain disruptions. Ford stock rose Thursday.
Late Wednesday, Ford also guided to the low end of its prior earnings range for the full year.
A day earlier, General Motors backed full-year targets after its Q3 earnings beat. GM stock rose Thursday.
Ford Earnings
Estimates: Wall Street expected Ford earnings to plunge 47% to 27 cents per share. Revenue was seen rebounding 5% to $37.464 billion.
Results: EPS fell 41% to 30 cents, Ford disclosed late Wednesday. Revenue rose 10% to $39.4 billion.
For Q3, Ford recorded a $827 million net loss, due to supply challenges and its investment in the Argo AI self-driving startup business. Ford is shutting down Argo AI, because "profitable, fully autonomous vehicles at scale are along way off," Ford CEO Jim Farley said in a statement Wednesday.
Supply shortages left about 40,000 partially built vehicles in inventory at the end of September, awaiting needed parts, Ford said, after first warning about the issue in September. The automaker also made about $1 billion higher payments to suppliers than expected.
Ford still expects to complete and ship those vehicles in the current Q4 as necessary parts arrive.
Outlook: Ford now anticipates full-year adjusted EBIT of about $11.5 billion, up about 15% vs. 2021. But that is at the low end of its prior target for $11.5 billion-$12.5 billion.
It cited expectations for "significantly higher" earnings in North America, as well as "strong, but lower" earnings from Ford Credit, its finance arm.
Wholesale shipments are expected to grow 10% in 2022, Ford said Wednesday.
However, Ford hiked full-year goal for free cash flow to $9.5 billion-$10 billion, up from $5.5 billion-$6.5 billion prior, citing strength in automative operations.
Wall Street is expecting Ford earnings of $1.98 per share for the full year, up 24%.
Ford Stock
Shares rose 1.6% to 13.03 on the stock market today, after closing roughly flat Wednesday. Ford stock rallied into earnings, retaking the 20-day moving average Monday, but it remains below the 50-day and 200-day lines.
Ford also owns a stake in Rivian. The Rivian investment weighed on recent quarters. But Rivian shares surged in Q3, and Ford saw a $600 million gain on its investment last quarter. RIVN stock advanced a fraction Thursday.
In Q3, Ford grew U.S. new vehicle sales 16% and said Oct. 4 that demand remains strong and orders are rapidly expanding.
Its EV strategy will be in focus on the Ford earnings call. Traditional automakers are making a bold and costly shift to electric vehicles. The EV shift comes while they face multiple challenges, from lingering chip shortages to a challenging global macro outlook.
Ford is aiming for a 600,000 global EV run rate by the end of 2023.
An EV ramp will be key. In September, Ford sold a total of 4,691 EVs in the U.S., though EV sales nearly tripled year over year.
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General Motors Earnings
Estimates: Analysts polled by FactSet expected General Motors earnings per share to rebound 23% to $1.88 on a 57% revenue bounce to $42.086 billion.
Results: GM earnings rebounded 48% to $2.25 per share. Revenue bounced 56% to $41.889 billion.
The automaker previously reported that its Q3 U.S. new vehicle sales grew 24%. It said Tuesday that its EV share in the U.S market climbed to 8% in Q3 thanks to record Bolt EV sales.
Outlook: Despite the big Q3 beat, General Motors still sees full-year EPS $6.50-$7.50. It continues to expect 25%-30% higher wholesale volumes and automotive free cash flow of $7 billion-$9 billion.
Wall Street now sees full-year GM earnings per share of $7.10, up 0.4%.
In a letter to shareholders Tuesday, GM CEO Mary Barra said the automaker was maintaining full-year guidance despite a challenging environment. "Demand continues to be strong for GM products and we are actively managing the headwinds we face," she wrote.
But GM pushed back a key target for EV sales, a setback to its chase of Tesla. It now expects to deliver 400,000 EVs in North America by mid-2024, instead of through 2023 earlier. The company cited a delay in ramping up EV battery production, the Wall Street Journal said.
GM production of EVs using its new Ultium batteries — which excludes Bolt EVs — remains scant.
GM Stock
Shares of General Motors gained 0.8% to 38.26 Thursday, after reclaiming the 50-day moving average Tuesday.
GM stock had rallied nicely into Q3 earnings, topping its 21-day moving average last Friday after coming off Oct. 10 lows. It remains below the 200-day average.
General Motors stock has a bottoming base with a 42.46 buy point.
Tesla stock edged up 0.2% Thursday, unsuccessfully trying to recover the 21-day average and well below longer-term averages.
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EV Transition Amid Challenges
At an investor day Nov. 17, GM will discuss the "rapid scaling of our EV portfolio," Barra said in her letter to shareholders Tuesday.
For General Motors, like Ford, an EV ramp is key.
GM aims to deliver 400,000 EVs in North America through 2024. But its pricey new Hummer and Lyriq EV models sold less than 500 units combined last quarter, with an older but refreshed Chevrolet Bolt model comprising the bulk of its EV sales.
Next year, the automaker plans to increase Bolt EV production by nearly 60%, it said Tuesday. In 2023, GM also plans to launch the first all-electric versions of the Silverado truck, Blazer SUV and Equinox SUV crossover, all from its Chevrolet brand, which is known for value.
Along with earnings, auto industry forecasts are under close scrutiny. Investors and industry watchers are bracing for any signs of weaker demand as interest rates rise and recession fears grow. But on Tuesday, GM CEO Mary Barra said "demand continues to be strong," echoing similar statements from both GM and Ford management earlier in October.
