Ford Motor Company [F]
1.70%
$
10.18 Exchange: NYSE Sector: Consumer Cyclical Industry: Auto Manufacturers
Q4 2023 ReportPublished: Feb 7, 2024
Earnings Highlights
Revenue of $45.96B up 4.5% year-over-year
Gross margin of 5.5%
Net income of -526.00M
""Our global hybrid sales were up 20% last year and we expect them to be up 40% this year." - Jim Farley" - Jim Farley
Ford Motor Company (F) Q4 2023 Financial Results: Navigating Challenges Amidst Transformation
Executive Summary
In Q4 2023, Ford Motor Company reported revenues of $45.96 billion, a 4.46% increase year-over-year. However, the company faced a significant operational setback, leading to a net loss of $526 million, underlining the pressures of post-UAW strike adjustments and market dynamics. Despite this, the outlook for Ford's Pro segment, which showed strong growth and robust margins, indicates potential for recovery and strategic progression in the electric vehicle (EV) sector. Management's commentary emphasized the company's evolving focus towards a blend of traditional and electric vehicles while enhancing operational efficiencies through cost-cutting initiatives, particularly in design and manufacturing. Investors should monitor Ford's ability to return to profitability while successfully transitioning to EV production within a competitive landscape.
Ford’s revenue growth in Q4 was modest, mainly fueled by a strong performance in its Pro segment. However, despite experiencing a rise in revenue, the sharp decline in gross and operating profit reflects rising costs associated with new product launches, including significant investments in EV technology. Management pointed out that the transition to cost-effective EV platforms remains a high priority to balance with customer demand shifts and ongoing quality improvements.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
45.96B
4.46%
4.93%
Gross Profit
2.53B
-59.08%
-59.54%
Operating Income
-245.00M
-106.55%
-121.70%
Net Income
-526.00M
-140.81%
-143.87%
EPS
-0.13
-140.39%
-143.33%
Key Financial Ratios
currentRatio
1.2
grossProfitMargin
5.5%
operatingProfitMargin
-0.53%
netProfitMargin
-1.14%
returnOnAssets
-0.19%
returnOnEquity
-1.23%
debtEquityRatio
3.53
operatingCashFlowPerShare
$0.62
freeCashFlowPerShare
$0.05
dividendPayoutRatio
-114.3%
priceToBookRatio
1.14
priceEarningsRatio
-23.16
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Transcript Highlights
- Management Commentary on EV Strategy: "Our next Gen 2 products will be profitable in the first 12 months of their launch. This will deliver profits above Model E's cost of capital." - Jim Farley
- Pro Segment Performance: "Ford Pro is nearly a $60 billion high-margin hardware, software and physical services business and most of that revenue is reoccurring." - Jim Farley
- Quality Improvements: "Quality now factors into 70% of the short-term incentives for our management at Ford." - Jim Farley
- Focus on Cost Reduction: "This year, we expect to see $2 billion of efficiencies flow through..." - John Lawler
- Investment in Talent: "Evolving to a compensation and benefit structure that is tied to our delivery business results..." - Jim Farley
"Our global hybrid sales were up 20% last year and we expect them to be up 40% this year." - Jim Farley
— Jim Farley
"With the improving trajectory of our business and strong free cash flow, we announced a quarterly dividend of $0.15 per share plus a supplemental dividend of $0.18 per share." - John Lawler
— John Lawler
Forward Guidance
### Forward Guidance
Management has set an optimistic outlook for FY 2024, projecting adjusted EBIT between $10 billion and $12 billion, reflecting the recovery into profitable territories aided by the absence of UAW strike effects. The expected EBIT for the Pro segment is anticipated to reach between $8 billion to $9 billion, bolstered by strong demand for vehicles and services in commercial sectors. However, continued investment in Model E may lead to widened losses between $5 billion to $5.5 billion, making profitability a focal point for management as they navigate dynamic market conditions.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
F Focus
5.50%
-0.53%
-1.23%
-23.16%
RIVN
-46.10%
-1.20%
-16.60%
-3.71%
TM
20.30%
10.00%
2.92%
12.29%
LCID
-1.61%
-4.69%
-13.50%
-3.69%
XPEV
6.20%
-15.70%
-3.71%
-17.17%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Despite a challenging quarter reflected in net losses, Ford's focus on its Pro segment and strategic investments in electric vehicles present a compelling growth story. The management's commitment to balancing legacy performance with new technology indicates a transformative journey poised for potential profitability as cost-cutting measures take effect. Moreover, maintaining robust liquidity through capital discipline is crucial as Ford navigates its path toward becoming a leading player in the electric vehicle space.
Key Investment Factors
Growth Potential
- Ford Pro's growing market position as a top provider of commercial vehicles, supported by projected infrastructure spending increases from government entities, positioning it for substantial revenue growth.
Profitability Risk
- Credit risks due to minimal margins from EV segments, coupled with significant investments needed for new technologies amidst volatile market conditions.
Financial Position
- Ford's strong liquidity position with $25.1 billion in cash, which allows some flexibility in navigating ongoing transformation and operational challenges.
SWOT Analysis
Strengths
Strong legacy brand with established market presence in trucks and commercial vehicles
Diverse product range including traditional vehicles and growing EV segment.
Operational flexibility due to robust cash position.
Weaknesses
Substantial losses in EV segment (Model E) reflecting high initial investment costs
Recent negative cash flow trends raising concerns about operational efficiency.
Opportunities
Expansion in electric and hybrid vehicle offerings, specifically through Gen 2 products that are projected to be profitable.
Leveraging Ford Pro's high-margin service offerings as government infrastructures increase.
Potential partnerships to enhance technology and distribution in the evolving EV market.
Threats
Intense competition from established automotive players pivoting towards EVs and new entrants like Tesla and Rivian.