Ford reaffirmed 2022 outlook and hiked the Ford stock dividend after crushing earnings estimates for the second quarter. Strong demand for traditional combustion and new electric vehicles offset supply and inflation headwinds, the automaker said.
"We're moving with purpose and speed into the most promising period for growth in Ford's history," Ford CEO Jim Farley said in an earnings release late Wednesday.
Ford earnings follow another Federal Reserve move Wednesday to tame inflation. The Fed raised interest rates another 0.75%, which could make car loans, credit cards and home mortgages more expensive.
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Ford Earnings More Than Quintuple
Estimates: Wall Street expected Ford earnings to jump 244%, year over year, to 45 cents. Total revenue was seen growing 38% to $36.871 billion, with automotive revenue gains offsetting a decline in Ford Credit revenue.
Results: Ford earnings vaulted 423% to 68 cents. Revenue leapt 50% to $40.2 million, driven by "a 35% increase in wholesale shipments together with favorable pricing and vehicle mix."
The automaker generated free cash flow of $3.6 billion. It will raise the quarterly dividend on Ford shares to 15 cents per share, up from 10 cents.
Ford also saw a mark-to-market loss on its Rivian stake.
Ford ended the quarter with $29 billion in cash and $45 billion to fund its EV and other growth initiatives. The new Ford dividend is payable on Sept. 1 to shareholders of record as of Aug. 11.
Lack of supply rather than demand is hurting auto sales broadly. But Ford's Q2 U.S. sales rose 1.8%, defying a double-digit industry decline. Sales fell 22% in China, amid a Covid resurgence in the country and ongoing global supply chain disruptions.
Outlook: Ford on Wednesday maintained 2022 guidance for adjusted EBIT of $11.5 billion-$12.5 billion, up 15%-25% from 2021. It continues to foresee adjusted free cash flow of $5.5 billion-$6.5 billion. Analysts polled by FactSet forecast Ford earnings of $1.92 per share in all of 2022, rising 21% from last year.
Ford's outlook assumes 10%-15% growth in vehicle sales and continued strong pricing, offset by headwinds of $4 billion in commodity pricing. Ford now expects cost pressures totaling about $3 billion for the year, up by $1 billion from a quarter ago.
Ford also cited expectations for improved chip supplies, offset by its forecast for material headwinds of $4 billion.
Ford Stock Jumps Late
Ford stock leapt 5.2% in late trade. Shares of Ford rose 3.6% to 13 amid a broad rally in regular trading on the stock market today. Last week, Ford stock regained the 50-day moving average for the first time since January.
GM stock gained 3.1% to 34.36 Wednesday. On Wednesday, GM missed Q2 earnings views but also maintained 2022 guidance. Ford's archrival said it expects "sharply" higher production and deliveries in the second half. Tesla stock popped 5.9%, extending its rally after a Q2 beat last week.
The relative strength line for Ford stock is improving after a tumble. It rallied strongly in the latter half of 2021. A rising RS line means a stock is outperforming vs. the S&P 500.
Both GM and Ford shares have roughly halved from their January peaks and remain well under their 200-day averages.
Radical, Risky EV Shift
Roughly a week ago, Ford announced a series of battery sourcing moves to reach its ambitious target of 600,000 electric vehicles annually by 2023 and more than 2 million EVs annually by 2026.
General Motors made similar announcements Tuesday. Auto giants are trying to convince investors that they have the batteries they need to produce several million electric vehicles every year.
But Tesla continues to lead by a mile.
By 2030, U.S. auto giants Ford, GM and Stellantis all aspire to have half their sales be electric cars, in a bold and risky shift away from traditional gas and diesel vehicles.
Stellantis, the former Fiat Chrysler, reports early Thursday.
Ford's new Lightning and Mach-E EVs are faring well in the market. But competition is rising, with GM preparing to launch at least three more new EVs in 2023, growing its EV lineup that includes the Hummer truck and Cadillac Lyriq SUV. EV startup Rivian, in which Ford still holds a stake after share sales, has a new electric SUV due later this year.
But their EV shift comes at a challenging time. Automakers face multiple headwinds, from supply disruptions and materials inflation to the specter of a U.S. and global recession.
In a sign of caution bred of uncertainty, General Motors will slow hiring, joining tech giants making such a move, it said Tuesday.
However, Mercedes-Benz parent Daimler, GM and Tesla all recently signaled pent-up demand and improved auto production in the months ahead.
