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Ford Now Expects a Full-Year Profit After Earnings Crush Estimates

By John Rosevear – Oct 28, 2020 at 5:09PM

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Pickups, SUVs -- and a partial recovery in China -- helped Ford trounce Wall Street's expectations.

Ford Motor Company (F -0.68%) said that its third-quarter profit was much higher than analysts had expected, thanks to strong sales of pickups and SUVs in the United States, and that it now expects a profit for the full year.

Ford's net income in the third quarter was $2.4 billion, on revenue of $37.5 billion. Both were higher than its results a year ago, when the automaker reported net income of just $425 million on revenue of $37 billion.

A close-up of the front end of a red 2020 Ford F-150 pickup truck.

Ford will launch an all-new F-150 soon, but sales -- and pricing -- of the outgoing model remained strong in the third quarter, helping Ford to a better-than-expected profit. Image source: Ford Motor Company.

Ford had previously warned auto investors to expect a full-year loss in 2020, but changed its forecast after sales and pricing were stronger than expected in the July-to-September period. In particular, executives said, continued strong demand for pickups and SUVs in the United States, along with higher sales in China, drove the better-than-expected results

On an adjusted basis, excluding one-time items, Ford earned $3.6 billion, or $0.65 per share. That was well above Wall Street's expectations: Analysts polled by Thomson Reuters had expected adjusted earnings of $0.16 per share, on average, on revenue of $32.86 billion.

Ford's adjusted operating profit margin in North America, a widely watched figure, was a stout 12.5%.

As expected, Ford generated $6.3 billion in adjusted free cash flow in the quarter, as it rebuilt working capital that had been depleted during the coronavirus-related production halt earlier in the year. The company ended the quarter with $29.5 billion in cash, an additional $15 billion in untapped credit lines, and $24.2 billion in debt. 

Ford confirmed that its next three new products -- the all-new F-150 pickup, the electric Mustang Mach-E, and the compact Bronco Sport SUV -- are on track to launch by the end of 2020.

 

John Rosevear owns shares of Ford. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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