Ford shares jump to 6-month high on Q2 earnings
Despite the electric vehicle business being a cash drain this year, Ford Motor produced better than expected earnings and sales. EPS came in at 29 cents, ahead of estimates of 12 cents.
Revenue also beat forecasts by nearly $3Bln, reaching $46bln and as a result the carmaker said it would return more cash to shareholders. The first quarter will start with an extra 18 cents per share dividend. Electric vehicle operations were a money pit though in 2023 for Ford, which said it will continue to be a cash drain this year. Its Model E lost an average of more than $47,000 per vehicle in the fourth quarter and Ford has decided to slow investment in new EV capacity to match slower demand.
(AI Video Summary)
Ford Motor
Ford Motor experienced a significant increase in the value of its shares on the tastylive platform, reaching its highest point in six months, after reporting better-than-expected earnings. The company exceeded analysts' predictions by earning 29 cents per share, compared to the projected 12 cents per share. Moreover, Ford's revenue surpassed expectations by nearly $3 billion, totaling $46 billion. This positive news prompted Ford to announce its intention to reward shareholders with additional dividends of 18 cents per share in the first quarter.
Ford's EV model
Additionally, Ford provided a profit forecast for 2024, estimating pre-tax profits in the range of $10 billion to $12 billion. This forecast follows the company's previous year earnings of $10.4 billion before taxes. However, Ford cautioned that its electric vehicle (EV) operations would continue to be a financial burden, dubbing it a "money pit" until 2023. Specifically, Ford's EV model, the Model E, incurred substantial losses of over $47,000 per vehicle in the fourth quarter. To address this issue, Ford decided to reduce investments in new EV capacity, aligning with the slower demand and prioritizing profitability before introducing more EV models.
Interestingly, Ford's positive news coincided with Toyota's statement highlighting the significant profitability potential of the hybrid market. Ford's shares performed exceptionally well, reaching a six-month high and closing at $12.82. Consequently, Ford decided to shift its attention towards enhancing its hybrid offerings instead of making heavy investments in unprofitable EV operations, a direction influenced by Toyota's encouragement.
In conclusion, Ford's impressive earnings and revenue results caused a surge in its share price. Nevertheless, the company acknowledged the financial strain of its EV operations and resolved to minimize investments in this area. Instead, Ford plans to focus on the hybrid market, inspired by Toyota's stance on its profitability.
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