Ford Motor Company (NYSE:F) will report its third-quarter earnings after the market closes on Wednesday, Oct. 23. Here's a look at what to expect.
What are Wall Street's expectations?
Wall Street analysts polled by Thomson Reuters expect Ford to report adjusted earnings of $0.26 per share, down from $0.29 per share in the third quarter of 2018. The analysts expect Ford's automotive-segment revenue to come in at $34.09 billion, down from $34.66 billion a year ago.
How did Ford's sales fare in the third quarter of 2019?
Ford does business in over 100 countries, but most of its sales and profits come from the United States, Europe, and China.
U.S.: Sales fell as Ford's product-line overhaul continued
Ford's U.S. sales fell 4.9% in the third quarter from a year ago:
- Tight supplies of the all-new 2020 Explorer SUV hurt sales and put a big dent in Ford's overall result, but supplies were improving as of the end of the quarter.
- F-Series pickup sales fell 6% as rivals General Motors (NYSE:GM) and Fiat Chrysler Automobiles (NYSE:FCAU) had success with their newer trucks.
- Sales of car models were down 31%. Ford said it has now sold out the discontinued Focus and C-Max, and supplies of the (also discontinued) Taurus and Fiesta are dwindling.
Overall sales were down, but average transaction prices were up as the mix of products that Ford sold improved. It's possible that Ford's margin in North America will improve from the 8.8% it reported in the third quarter of 2018.
Europe: SUVs, vans, and a new Focus all did well
Ford's sales in its key European markets rose 3.1% in the third quarter. Very strong sales of the Focus (a new version, launched late last year), Ford's SUVs, and the Transit line of commercial vans more than offset weaker results for other sedan models.
Ford Europe lost $245 million in the third quarter of 2018. With increased sales, improved product mix, and a cost-reduction effort well underway, it's possible that Ford will report a smallish profit in the region this time around. But even if not, a significant improvement seems very likely.
China: Still a work in progress
Ford's sales in China fell 30.3% in the third quarter. After a near-collapse of its China business, Ford has begun an elaborate restructuring that will include over 30 new or revamped models for the region by the end of 2021.
The first of those models have arrived, and while the headline sales numbers are still grim, Ford wants investors to know that there was visible progress within the quarter. September sales of Ford-brand vehicles in China were up 5% from August and 25% from July, while the Lincoln brand's September sales were up 11% from August and 13% from July.
I don't expect Ford to post a third-quarter profit in China -- it still has a lot of work to do to get its regional operation back in the black. But I do expect a nice improvement over the $378 million loss it posted in the third quarter of 2018.
What to expect when Ford reports earnings
Bob Shanks, Ford's now-retired chief financial officer, said in April that restructuring costs and spending related to new-product launches would hurt Ford's results as 2019 unfolded. Some of that will hit in the third quarter: Ford said that it will take noncash one-time charges of $800 million to $900 million from write-offs related to a restructuring of its operations in India.
That won't affect Ford's adjusted earnings per share, as Ford's "adjusted" figures exclude one-time charges. But Ford's earnings will be hit by the lower level of overall sales and costs related to new-product launches (including the Explorer and the upcoming 2020 Escape), offset somewhat by improvements in product mix in the U.S. and Europe. Altogether, I expect Ford's adjusted per-share earnings to be close to (or even about equal to) its year-ago result.