- Firm swings to $2 billion full-year loss
- Farley frustrated at lack of progress
- Shares drop 6% after-market
Jim Farley, president and chief executive of Ford Motor Company (F:NYSE), was blunt in his assessment of the firm’s poor fourth-quarter and full-year results, blaming ‘deeply-entrenched’ issues with costs and systems for holding the firm back.
‘To say I’m frustrated is an understatement because the year could have been so much more for us’, he said in the post-results analyst call.
MONEY LEFT ON THE TABLE
‘I’ll start by addressing the obvious’, continued Farley. ‘Our fourth-quarter and full-year financial performance last year fell short of our potential.’
For the fourth quarter the company posted revenue of $44 billion, up 17% on the previous year and well ahead of market forecasts of around $41 billion.
However, profits were just $1.3 billion or 32 cents per share against $12.3 billion or $3.03 per share in the year-ago period, while adjusted earnings of 51 cents were well below the consensus estimate of 62 cents per share.
For the full year, the firm racked up revenue of $158 billion, a 16% increase on 2021, but the bottom line swung from a profit of $17.9 billion to a loss of $2 billion.
‘We should have done much better last year,’ added Farley. ‘We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.’
GETTING BACK ON TRACK
Ford announced a major reorganisation in March last year to separat its EV (electric vehicle) business from its conventional ICE (internal combustion engine) cars and its van and commercial vehicle operations.
As with many large-scale transformations, it takes time to tackle old established practices, and Farley admitted there were ‘deeply-entrenched issues in our industrial system that have proven tough to root out’.
Nevertheless, he remains confident about the year ahead: ‘I’m excited about 2023, which is pivotal for us. We have clarity and ambition with the Ford+ plan, a strong team carrying it out, and a lineup of great products and customer experiences that’s getting even better.’
For this year, the firm is predicting profits of between $9 billion and $11 billion, based on the assumption the US experiences a ‘mild’ recession, Europe sees a ‘moderate’ recession and the dollar stays elevated.
‘We have great flexibility to invest in the Ford+ growth plan and return capital to shareholders at the same time’, added chief financial officer John Lawler. ‘Going forward, we intend to target distributions of 40% to 50% of free cash flow.’
Based on its current cash flows and the monetisation of its stake in EV-maker Rivian (RIVN:NASDAQ), the company announced it would pay a first-quarter dividend of 15 cents per share and a special dividend of 65 cents per share.
Ford shares gained 3.8% to $14.30 during normal trading but fell 6% after the close on the disappointing fourth-quarter update.
