[Ed753]

Ford Q2 earnings easily beat estimates; stock jumps after hours

Pras Subramanian
·Senior Reporter
Wed, July 27, 2022 at 4:43 PM

Ford (F) reported second quarter financial results after the bell on Wednesday easily topping estimates on both the top and bottom lines, and reaffirming its full-year profit guidance.

For the quarter, Ford reported the following numbers compared to Wall Street's expectations, per Bloomberg consensus estimates:

• Revenue: $40.2 billion vs $34.78 billion
• Adjusted EPS: $0.68 vs $0.45

Ford also reiterated its full-year adjusted EBIT (earnings before interest and taxes) guidance of $11.5 billion to $12.5 billion, up 15% to 25% from 2021.

Ford shares were up 5% in after hours trading following the report's release.

“We’re moving with purpose and speed into the most promising period for growth in Ford’s history – to innovate and deliver great products and connected services, raise quality and lower costs,” said CEO Jim Farley said in a statement. “We’re giving customers great experiences and value, improving our profitability and making Ford the next-generation transportation leader.”

Ford also reported $2.9 billion in operating cash flow and $3.6 billion in adjusted free cash flow, leading the board of directors today to issue a dividend of $0.15 a share for all outstanding stock.

In addition, Ford said starting next year it will operate and report financial results around its 3 core business units:

• Ford Blue - the traditional ICE (internal combustion engine) business
• Ford Model e - the EV business along with software and connected services
• Ford Pro – the commercial and government vehicles business unit.

<Continued at Link>

 

[Ed753]

The best thing is: Ford raised their dividend. C'mon GM just DO IT!!

Good catch! I read it, but it didn't register, it was 15 cents before they suspended it in 2020.
- Doesn't appear GM is in the position to reinstate the dividend...

 

[Ed753]

I understand his comment about cutting heads, but what a way to demoralize the people making the vehicles which generate your profits!

And if you listen to Farley, he states that very clearly..............
Additionally, Ford is very-clear, they don't have a goal set to eliminate ICE production, unlike MB.

I hope MB handles GM's situation with more tact. No matter what, heads will be lost, but it's how it is handled..

So not the way GM did it in their 2018/2019 "hair-cutting"?

Should MB's worth be set by one quarter?

And again, what happens next quarter if we find out GM was hoarding their chips and has a blockbuster Q3?

Will you be rallying for her to have a raise?

But, wouldn't that be "just one quarter"? 😐

 

[Ed753]

I'm sure those 8,000 people will be real glad that Ford hasn't publicly stated they are eliminating ICE by 2035.

2018.2019 - GM did it so I can do it too!

So, you didn't listen to what Farley said, which means you didn't understand what I said... 'great'

The runaway inflation is changing the equation for all companies, you act like GM is immune? Did you forget about their Q2 earning report already?

Quarter - you didn't take the meaning of my words correctly.

Lets ignore for a moment that it was H1 (and not a quarter) but you were replying to this story:

Stellantis posts record first half profit margin ahead of EV reveals

And said this...

Should MB's worth be set by one quarter? And again, what happens next quarter if we find out GM was hoarding their chips and has a blockbuster Q3? Will you be rallying for her to have a raise?

So what exactly did you mean?

 

[Ed753]

This conversation will quickly devolve, so I'm stepping out.

I'm sorry you didn't hear any of the Farley's interviews; him talking about Q2 earnings would have made this a lot more balanced and productive conversation.

Can you believe Ford raised the dividend 50%!?

 

[Ed753]

I shouldn't respond to your snide assumptions (and your comment proved out my point) but here goes. The below is a transcript of his comments pertaining to this. Can you highlight the areas that will make these 8,000 people feel warm and fuzzy? Take out the corporate babble and all I see is 8k will lose their jobs. And, in the context of the entire meeting it is even worse - money hand over fist, huge dividend increase, but Joe Ice - we are letting you go.

I've been on the receiving end of similar statements. They demoralized the division when made and then when it happened it left the division I worked for traumatized. But it was worded as a great thing!!!!

"Assumptions" - Where is the 8,000 part, am I missing it, did you not include it or doesn't it exist?..............

Do you think with the "sharp turn" GM is taking toward EV's, their isn't 8,000 - 18,000 - 28,000 ICE related employees with targets on their back?

(Thanks for proving my point, sorry this took so long, now let's get to talking about how well Ford did in Q2 and why GM didn't, and how Q3 is going to shape up)

Can you believe Ford raised their dividend 50% back to where it was pre-Covid!

 

[Ed753]

VW ID.4 has 153 Days Supply, Show me anything "Tesla" close to that Days Supply? Chop nearly 100 off of that number @ 53. VW has 153 days of ID.4 inventory?

In fact Tesla's Numbers are crazy amidst the Supply Chain issues at 254,000 in the 2nd Quarter. https://driveteslacanada.ca/news/tesla-q2-2022-production-deliveries/

Remembering VW is the Largest Manufacture, Tesla is a New Comer and EV only.

This has me thinking.......

If a conservative, everyday "practical" EV has trouble finding buyers, but not a Tesla; has the industry been fooled into thinking there is more demand for "practical" EV's than there really is?

 

[Ed753]

But that practical EV isn't having trouble finding buyers. VW is going to crank up ID4 production. Again, that inventory number has asterisks attached



Are they? At this moment affordable EVs are not profitable enough for most automakers. The Explorer EV, which is coming next year, will be plenty practical but will be at a price point that's comfortable for Ford. The base ID4 MSRP is $4k below the Mach-E. An Escape EV would need to be more like $6k+ cheaper than the Mach-E, which is not going to happen for Ford in today's environment. I think we'll see the cheap EVs in 2025 and beyond as cheaper batteries become a reality.

OK, you got me, but if a "practical" EV is overpriced, compared to an ICE equivalent, is it "practical"?

 

[Ed753]

That's up to the consumer (seems like they're saying yes). Where I live in the PNW, people were more than willing to turn in their Honda Civics and Toyota Priuses (seriously, these were a huge chunk of trade-ins) for a Tesla Model 3 or similar that were significantly more expensive.

Again, we'll see better price parity in a few years. If you're particularly price sensitive then sure it may not be the right choice for you right now.

A Tesla 3 is "practical"?

 

[Ed753]

Toyota Sales Are Going From Bad to Worse (msn.com)

Interesting that most makes are clinging to the second half of they year being a lot stronger - they must know chip supplies will be better soon.

Toyota was up a lot last year, (+44.5% in Q1/Q2 2021) because they were one of the few that had banked chips/components/inventory, with the continuation of supply-chain challenges, of course they are going to be down compared to the fist 1/2 of last year.

 

[Ed753]

I think the auto industry was tricked by the Prius. I think the Prius was a fluke (right thing at the right time/political mood with the right styling at the right price) - instead of the great new hybrid tech being launched in a high end vehicle as tech normally is.

I think that led the industry to thinking they could penetrate pure electric that way too, but missed the cheap price tag of the Prius. I think the major makes would've been better off using their high end brands to launch BEV. Bolt should've been a stylish Cadillac and the Leaf an Infiniti and BMW never should've made that nerdy BEV vehicle. A $40k Bolt is a tough sell.

A compact hatchback that get 50-55 MPG?.... "tricked"?

One of the primary reasons for the decline in the Prius is all the other Hybrids that Toyota offers...

🤫

 

[Ed753]

No, not talking about the decline of the Prius, I'm talking about the success of the Prius tricking other makes into thinking that was the right way to launch their more expensive green tech.

Has anyone else built an economical "Prius Fighter" that failed?

 

[Ed753]

Yup - just looking at it at the angle that most of the auto makes continue to say things will improve this year even in light of many not doing well right now. We are "running out of 2022" to get more chips to increase sales volume.

I wasn't able to find July 2022 Sales numbers for Toyota, I still think China making funny-business....

 

[Ed753]

Honda did.

But, my point is, the success of the Prius led GM and the rest of the industry to try to emulate their approach. But the tech they were using was more expensive than the Prius hybrid tech and to me, and apparently the market, a $40k Prius equivalent doesn't light the masses on fire.

Ya got a model name?

Which why I included the word "economical" in my question.....

 

[Ed753]

And that highlights my point - you don't know what vehicle I'm talking about as it was/is a dud in the market.

Honda Insight, launched in 1999. They've kept with it but largely a failure in comparison to the Prius. This link has sales stats 11 Honda Insight Statistics You Should Know (Facts & Numbers) (motorandwheels.com)

OK, cool-cool, I just wanted to make sure I knew what you were talking about, I didn't want to assume anything.....

The first-Gen was something else, the second-Gen was an honest attempt, but it never had the economy numbers of the Prius, so a "green" can that isn't efficient is just another car, no?

Here is the 2022 version of that discontinued car by the way....

 

[Ed753]

Is Honda now a disaster story?

For whatever reason, they are having a REAL hard time with supply-chain, the older I get the less impressed I am with Japanese companies......

Back to Ford's Profits.

They are going to Grow also. The Price Increase, F Series Invoiced after May 15th, are just starting to roll onto Dealers' Lots. And the Price Increase is significant. $3500 CDN$$m while Demand is steady.

There is a thought that demand is actually severely declining, but capacity is off so much, and inventory is so short, that it's not really noticeable... Basically, what I've said about new and used car prices, gets right back down to Supply & Demand.

Price (cost) increases are still going on, we had almost 1/2 of our suppliers push out price increases for July, other one or two months before or after, pairing back free freight, increasing MOQ, to think inflation is over, is a bit optimistic. (but it will either get better or 'break')

 

[Ed753]

I certainly hope the reserve eases up onmore rate hikes until we see what effect they have had. Don’t want to crash the economy, just ease back on the reins a bit to restore balance.

Either the Fed does it, or we (risk) having runaway inflation; crashing the economy will hurt a lot of people, runaway inflation will hurt everybody...

 

[Ed753]

The concern is that they have been asleep at the switch and are now trying to make up for being slow to act. Interest rates were never meant to stay super low - that’s out of balance.

Fortunately, it’s far from runaway inflation and mostly fueled corporations cashing in and making up for pandemic losses. When they’re done, prices will drop and things will go back to normal, we’re seeing it with gas prices coming back - diesel price is important as it touches most Deliveries and transport.

I've been saying for months that there was speculation in oil/gas, just because that goes down, doesn't fix the issue/issues, and after months and months of increases, inflation going down to "only 4 or 5 percent is still up, on the elevated numbers..... Lower gas prices, just means people have more money to buy/spend more on other things, that's going to push or keep prices up or worse, continuing to go up.....

 

[Ed753]

I don’t think so, prices are levelling off, a slowing in housing and property is exactly what’s needed but not a crash. The optics of this gets tricky for the very reasons you explained, the inflation rate is a lagging indicator that happens after everything else. Fingers crossed for a soft landing - something that’s in everyone’s interest even if the nay sayers don’t see it yet.

The easing of gas prices has an interesting side effect, it's a key element in making consumers feel better about the situation, house prices flattening or falling slightly is another…..all counterbalanced by higher interest prices.

I wonder how things will look by November- December.

Costs were rising a lot LAST YEAR, we were told to ignore it, it was "transitory"...... Last year we had price increases in January and September, then did another one this year in April, costs kept going up, none of that was due to the recent gas price increases....

Not sure if I shared this already, but gas prices are falling, because people are using less of it; they can't afford the gas, or the spending that takes place at the places they normally drive to.

Wages and housing are very sticky............ most bosses don't take back raises, just because inflation slowed down, rents are typically 12 month or longer terms, and if you just paid $735,000 for that house, just like mine (that I paid $329K for) congratulations, you own it, the seller already cashed your check you aren't getting any of your money back, and god help you, if you got a ARM.....

 

[Ed753]

Google "Credit Card Delinquency" it's not "bad" yet, but it is certainly going in the wrong direction (you like trends right?) and considering the number of people that live "pay-check-to-paycheck" increasing credit card balances, with increasing interest rates...

I heard it described like this; 30% of the population is doing 'OK' it's just the other 70% that wasn't before all this started...