Pasteleosa: Ford earnings preview: Expectations are high following GM's blowout quarter

Ford (F) shares sunk late Thursday after the automaker reported fourth quarter profits that missed expectations and CEO Jim Farley said the company "should have done much better last year."

Ford reported quarter adjusted EBIT — or earnings before interest and taxes — of $2.6 billion, missing Wall Street expectations for $3.45 billion. On a per-share basis, adjusted profits also missed expectations, coming in at $0.51 against analyst forecasts for $0.62. Ford shares were down as much as 8% in after hours trade on Thursday.

For the quarter, Ford reported;

Revenue: $44.0 billion vs. $39.9 billion expected
Adjusted EPS: $0.51 vs. $0.62 expected
Adj. EBIT: $2.6 billion vs. $3.45 billion expected

The revenue figure represents a 17% jump compared to a year ago, where Ford was still struggling with component and chip shortages.

On the profitability front, Ford reported full year adjusted EBIT (earnings before interest and taxes) of $10.4 billion, below prior guidance of $11.5 billion.

"We should have done much better last year," Ford CEO Jim Farley said in a statement. "We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance."

Ford announced a 2023 full-year EBIT forecast of $9 billion to $11 billion; the consensus estimate was for around $10 billion. Ford also declared a first-quarter regular dividend of 15 cents per share and a supplemental dividend of 65 cents per share, which reflects the company monetizing its stake in Rivian.

Last quarter, Ford CFO John Lawler noted some of customers were hesitating at higher sticker prices, and using longer-term loan financing to ease monthly payments. Lawler also said Ford was seeing customers passing on higher trim levels in order to purchase more affordable vehicles.

The street expected Ford to have a strong quarter following GM’s monster Q4 performance, where the automaker reported a huge profit beat and record revenue. GM also hit the top end of its full-year 2022 EBIT forecast, and also guided its full-year 2023 higher than analysts were expecting, seeing $11.5 billion in EBIT this year.

Investors will be watching for any more color on demand issues creeping up for Ford due to slower macro conditions and higher interest rates. Ford said in its earnings release that potential headwinds it sees include "a mild recession in the U.S. and moderate recession in Europe; higher industrywide customer incentives, as vehicle supply-and-demand rebalances; a lower profit from Ford Credit."

On the flipside, Ford said it sees potential tailwinds like "supply chain improvements and higher industry volumes; launch of the all-new Super Duty truck; and lower costs of goods sold, including for materials, commodities, logistics and other parts of the industrial platform."

This story is developing.