Ford Motor (F +2.68%) is set to report its fourth-quarter and full-year 2019 earnings on Tuesday, Feb. 4. What should auto investors expect?
What Wall Street's forecasting
Wall Street analysts polled by Thomson Reuters expect Ford to report adjusted earnings of $0.16 per share, on average, on automotive revenue of $36.67 billion.
Both figures would be down from Ford's results in the fourth quarter of 2018, when the company reported adjusted earnings of $0.30 per share on automotive revenue of $38.72 billion.
How did Ford's sales fare in the fourth quarter of 2019?
Ford does business in over 100 countries, but the vast majority of its income is generated in the United States, China, and Europe.
U.S.: Sales slipped as Ford's product-line overhaul continued
- Ford's U.S. sales fell 1.3% in the fourth quarter from a year ago.
- Sales of Ford's F-Series pickups, its most important profit driver, rose 1.6% in Q4 despite stiff competition from General Motors and Fiat Chrysler Automobiles, both of which have newer trucks.
- Ford's Transit and Transit Connect commercial vans both posted double-digit-percentage sales increases.
- Lincoln sales rose 17.8% on strong demand for the brand's new upscale SUVs.
- But sales of the Ford Explorer were down 14.6% from a year ago as the company worked to recover from production snags that have limited supplies of the all-new 2020 model.
Tight supplies have limited sales of the all-new 2020 Ford Explorer. Image source: Ford Motor.
China: Ford continued to lose ground
- Sales in China fell 14.7% in the fourth quarter from a year ago, but there are signs that the company's China business is finally stabilizing.
- Sales of Ford-brand vehicles were down 18.8% from Q4 2018, but were up 7.6% from the third quarter of 2019.
- Sales of Lincoln-brand vehicles were down 17.6% from Q4 2018, but up 11.4% from the third quarter of 2019.
- Sales of the Ford Transit family rose 10.6% in the fourth quarter from a year ago.
Europe: A mixed bag
- Ford's sales in Europe rose 2.2% in the fourth quarter from a year ago.
- The gain was more than explained by a 79% year-over-year increase in sales of the Kuga. The Kuga is the European twin of the Escape SUV. Ford will launch an all-new version shortly; dealers were aggressively selling down inventories of the outgoing model.
- Sales of the Focus and Fiesta slipped. It's likely that the Kuga clearance sales were at least partially responsible.
- Transit commercial-van sales were mixed: Sales rose for the short-wheelbase Transit Custom, but fell for the full-size Transit.
What does Ford's guidance tell us?
Ford cut its full-year 2019 guidance in October on concerns about recall costs and rising incentives. For the full year, it expects:
- Adjusted earnings per share between $1.20 and $1.32. (Ford's adjusted earnings per share through the first three quarters of 2019: $1.06.)
- Adjusted earnings before interest and tax (EBIT) between $6.5 billion and $7.0 billion. (Ford's adjusted EBIT through the first three quarters of 2019: $5.9 billion.)
Assuming that the automaker meets its guidance, we can expect it to report adjusted earnings per share between $0.14 and $0.26, and adjusted EBIT between $0.6 billion and $1.1 billion.
What to expect when Ford reports
Given Ford's so-so performance in the U.S. and Europe, and its less-terrible-but-still-terrible performance in China, I think it's reasonable to expect Ford's results to come in at the lower ends of its guidance ranges. We'll find out on Feb. 4.
