Ford shatters Wall Street’s earnings expectations, raises guidance for the year on new vehicle demand

Earnings

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The badge of a Ford Motor Co. E-Transit electric vehicle during a presentation in Washington, D.C., U.S., on Wednesday, July 28, 2021.
Al Drago | Bloomberg | Getty Images

DETROIT – Ford Motor is announcing third-quarter earnings after the markets close Wednesday.

Here’s what Wall Street expects, based on average analysts’ estimates compiled by Refinitiv.

  • Adjusted EPS: 27 cents a share
  • Automotive revenue: $32.54 billion

In July, Ford raised its guidance for the year, but warned investors the second half of the year would be weaker than the first regarding its operating profit, which was at $5.9 billion through June. At that time, the company said full-year adjusted earnings before taxes would be between $9 billion and $10 billion and adjusted free cash flow of between $4 billion and $5 billion.

The company increased annual guidance despite losing roughly half of its production in the second quarter due to an ongoing global shortage of semiconductor chips. Ford’s supply of the parts was expected to improve during the third-quarter.

CFO John Lawler cited $3 billion to $4 billion in favorable higher sales volumes, but said commodity costs, lower earnings from Ford Credit and other factors such as $500 million in higher warranty costs to drag down its results during the back end of the year.

Ford reported a net profit of $2.3 billion and an adjusted pretax gain of $3.6 billion during the third quarter of 2020. That was when dealerships and plants largely reopened after being shuttered during the second-quarter due to the coronavirus pandemic. Its automotive revenue was $34.7 billion in the third quarter of 2020.

Ford’s stock is up by about 80% this year, so aside from third-quarter earnings, investors will be watching for any additional drag on the automaker heading into next year.

Ford received a couple bullish calls from Wall Street analysts heading into earnings, including an upgrade by Credit Suisse to outperform from neutral.

Ford’s largest American rival, General Motors, reported third-quarter earnings Wednesday morning that beat Wall Street’s estimates. Despite the beats, GM’s stock declined by more than 5% during intraday trading due to the automaker lowering free cash flow guidance for the year and not meeting some investor expectations for the remainder of the year.

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