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Ford (F) Q2 Loss Narrower Than Expected, Revenues Top Estimates

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Ford (F - Free Report) reported second-quarter 2020 adjusted loss per share of 35 cents, narrower than the Zacks Consensus Estimate of a loss of $1.25. Higher-than-anticipated automotive sales in North America and Europe resulted in this narrower-than-estimated loss.

In the prior-year quarter, adjusted earnings had come in at 32 cents per share. The dismal results resulted from lower automotive sales across all markets served. The firm’s second-quarter sales were affected by depressed demand for vehicles, thanks to the coronavirus outbreak.

In the second quarter, the company reported adjusted negative EBIT of $1.9 billion, as against the profit of $1.7 billion recorded in the corresponding period of 2019. The U.S. auto giant reported net profit of $1.1 billion.

Ford registered revenues of $19,371 million in the June-end quarter, down from the year-ago quarter’s $38,853 million. During the reported quarter, the company generated automotive revenues of $16,622 million. The figure surpassed the Zacks Consensus Estimate of $14,976 million. In the prior-year quarter, the figure had amounted to $35,758 million.

Revenues from Ford Credit declined 11.3% year over year to $2,739 million. Revenues from Ford Mobility came in at $10 million, up from the $6 million recorded in the second quarter of 2019.

Ford Motor Company Price, Consensus and EPS Surprise

Ford Motor Company Price, Consensus and EPS Surprise

Ford Motor Company price-consensus-eps-surprise-chart | Ford Motor Company Quote

Ford Automotive

During the April-June quarter, wholesale volume in the Ford Automotive segment plummeted 53% from the prior-year period to 645 million. The segment recorded negative EBIT of $2,089 million, as against the prior-year profit of $1,373 million.

In North America, revenues plunged 54% year over year to $10.9 billion during the reported quarter. Wholesale volume dropped 61% from the prior-year quarter to 272,000 units. Further, negative EBIT was $974 million, as against the positive EBIT of $1696 million reported in the year-ago quarter.

In South America, revenues slumped 75% year over year to $0.2 billion. Wholesale volume tanked 81% from the year-ago quarter to 14,000 units. The region reported a negative EBIT of $165 million, narrower than the prior-year loss of $205 million.

In Europe, revenues significantly fell 51% to $3.6 billion, year on year. Wholesale volume decreased 58% from the year-ago period to 154,000 units. The region registered a negative EBIT of $664 million against a profit of $53 million reported in the year-ago quarter.

In China, revenues declined 12% year over year to $0.8 billion. Further, wholesale volume increased 34% from the prior-year figure to 169,000 units. The region reported a negative EBIT of $136 million, narrower than the year-ago loss of $155 million.

In the International Markets Group, revenues dropped 60% from the year-ago figure to $1 billion. Wholesale volume dipped 64% from the prior-year level to 36,000 units. Further, the region reported a negative EBIT of $150 million, widening from the loss of $72 million witnessed in the prior-year quarter.

Financial Position

The company reported negative second-quarter adjusted free cash flow of $5,309 million. Ford had cash and cash equivalents of $30.9 billion as of Jun 30, 2020 compared with $17.5 billion on Dec 31, 2019. Automotive long-term debt increased to $37.4 billion from the prior quarter’s $13.2 billion.

Outlook

The pandemic-induced mayhem has caused massive damages, and the situation is unlikely to improve anytime soon. Given the rate at which the virus is spreading and the fact that customers are likely to put off spending on big-ticket discretionary items for quite some time, Ford is unlikely to churn big profits for a while. Importantly, the firm expects third-quarter adjusted EBIT in the range of $0.5-$1.5 billion.

Ford also intends to launch the revamped version of F-150, Mustang Mach-E and Ford Bronco this year, which were delayed due to the pandemic.

Zacks Rank & Stocks to Consider

Currently, Ford carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto sector include Sonic Automotive Inc. (SAH - Free Report) , AutoNation (AN - Free Report) and LCI Industries (LCII - Free Report) . While Sonic Automotive and AutoNation sport a Zacks Rank of 1 (Strong Buy), LCI Industries carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Sonic Automotive have climbed 30.3%, year to date, compared with the industry’s rise of 11%.

Shares of AutoNation have rallied 6.2%, year to date, compared with the industry’s gain of 10.9%.

Shares of LCI Industries have appreciated 15.9%, year to date, as against the industry’s decline of 5.4%.

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