Ford’s shares slide on reduced year-end advice despite earnings beat

Ford's shares slide on reduced year-end advice despite earnings beat - us-canada

People walk by a Ford Escape SUV exhibited through the media day for the Shanghai auto show in Shanghai, China, April 16, 2019.

Aly Song | Reuters

DEARBORN, Mich. — Ford Motor delivered a huge earnings beat for the next quarter but reduced investor expectations for the remainder of the year as the automaker grapples with falling consumer demand, mostly in China.

Here is what Wall Street expected, based on Refinitiv consensus estimates:

  • Adjusted earnings: 34 cents per share . 26 pennies expected.
  • Automotive earnings: $33. 93 billion vs. $33. 98 billion anticipated.

The automaker said it expects to make less profit than previously anticipated for the year, decreasing its 2019 earnings guidance to between $6.5 billion to $7 billion, or between $1. 20 and $1. 32 per share. It said it would earn between $7 billion to $7.5 billion, or between $1. 20 and $1. 35 per share.

The provider’s shares dropped by more than 3 percent in after-market trading.

The change in advice was attributed to higher than anticipated warranty costs and incentive spending in addition to weakening sales in China, according to the firm.

“From a key takeaway standpoint, we think Q3 was a good quarter,” Ford CFO Tim Stone told reporters during an earnings briefing. “The progress we’ve made also indicates we have more work to do, more opportunity ahead but it’s a good start for the year.”

The third-quarter was anticipated to be Ford’s worst of this year as part of a weaker second half compared to 2018. The automaker strongly beat Wall Street expectations in the first few months of this year earlier missing them throughout a noisy second quarter.

Jim Hackett announced a massive $11 billion turnaround plan this past year, boldly choosing to phase out all sedans — except for its iconic Mustang — to refocus the business on its trucks and SUVs. The program also frees up funds to ramp up its own electrical and autonomous car programs. As part of this restructuring, Ford slashed about 10percent of its white collar workforce, about 7,000 workers, earlier this season.

Investors have been patiently waiting to observe the results. Ford’s shares hit an almost decade-long low in December, closing at $7. 63 a share on Christmas Eve, and are still trading under $10 a share, based on information compiled by FactSet.

The third-quarter report is the first since Moody’s Investors Service downgraded Ford’s credit rating to junk status in September.

This is breaking news. Please check back for updates.

Ford's shares slide on reduced year-end advice despite earnings beat - us-canada

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