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Earnings Results: Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

Ford Motor Co. late Thursday reported quarterly profit that was about three times higher than last year’s and a 12% increase in its revenue, moving it to raise its outlook for 2023, but the beat-and-raise was overshadowed by a delay in EV production goals.

Ford stock F, +0.44% initially rose about 3% after the positive results, with Chief Executive Jim Farley telling investors that the company’s goal is to match an “exciting, long-term vision” of itself with “boringly predictable execution quarter after quarter, year after year.”

Share gains started to fade, however, as investors zeroed in on the shifted production goal, and ended the extended session down 1.2%. Ford said it expects to reach a production rate of 600,000 EVs in 2024; when it reported first-quarter earnings in May it said it would reach that milestone by the end of this year.

The company’s EV production growth has been “disappointing,” CFRA analyst Garrett Nelson said Thursday.

Nelson said he was “cautious” on Ford in light of the stock’s run so far this year and the possibility that “higher-for-longer” interest rates would weigh on sales after a strong first half of the year. Looming labor negotiations with the United Auto Workers are another reason for caution, he said.

Ford earned $1.9 billion, or 47 cents a share, in the second quarter, nearly three times higher than in the year-ago period and a 4% margin, the company said. Adjusted for one-time items, the automaker earned 72 cents a share.

Revenue rose 12% to $45 billion, Ford said, and its cash and liquidity are “persistently strong.” The revenue increase included a 39% rise for Ford’s EV business.

Analysts polled by FactSet expected Ford to report adjusted earnings of 54 cents a share on sales of $43.17 billion.

Supply-chain “disruptions” have persisted but are now easing, and Ford has “more work to do” to streamline its systems, reduce costs and improve quality, Farley said in the call.

EV adoption is still in the upswing, Farley said, but the number of companies entering the market is growing even at the higher end of the market. With its varied offers, though, Ford is building EV “loyalists” to its brand, Farley said.

Ford lifted its EBIT guidance range for the full year to between $11 billion and $12 billion. It also adjusted upward its expectations for 2023 adjusted free cash flow to between $6.5 billion and $7 billion. Capital expenditures would be between $8 billion and $9 billion, the automaker said.

The guidance presumes “headwinds” including “global economic uncertainty and inflationary pressures, higher industrywide customer incentives and continued EV pricing pressure,” Ford said, as well as increased warranty costs and costs associated with union contract negotiations.

On the positive side, “tailwinds” accounted for in the guidance included “improved” supply chain, higher industry volumes, upside from the its all-new Ford Super Duty truck and lower commodity costs, Ford said.

Ford earlier this month surprised Wall Street by cutting the price of its sought-after electric pickup truck, the F-150 Lightning.

Ford earnings close the cycle for major U.S. automakers, as Tesla Inc. TSLA, -3.27% reported second-quarter earnings last week and General Motors Co. GM, +1.78% earlier this week.

Shares of Ford have gained 19% so far this year, matching the advance for the S&P 500 index SPX, -0.64%. The stock holds an outperformance, however, in the past three months, up 19% to the S&P’s 11%.

See also: GM, Hyundai and other car manufacturers to build 30,000 fast EV chargers in challenge to Tesla

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