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Ford (F) Q2 Earnings Crushes Estimates, '21 View Raised

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Ford’s (F - Free Report) shares rose 3.8% in after-hours trading, as the U.S. auto giant managed to report surprise profit for second-quarter 2021, breezing past the Zacks Consensus Estimate of a loss of 11 cents per share. This marked the fifth straight earnings beat for the firm. Investors were also encouraged as the company raised its full-year 2021 guidance, citing strong demand and order book for recently launched vehicles as well as upcoming models.

Earnings & Revenue Snapshot                                     

Ford posted second-quarter 2021 adjusted earnings of 13 cents per share against the Zacks Consensus Estimate of a loss of 11 cents. The bottom line turned around from the year-ago loss of 35 cents per share. Higher-than-expected revenues, primarily in Europe and North America markets, led to the outperformance. Its consolidated second-quarter revenues came in at $26.8 billion, up 38% year over year.

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

Segmental Performance

For the second quarter, total wholesale volume in the Ford Automotive segment increased 18% year over year to 764,000 units. Revenues of the segment rose 45% year over year to $24.1 billion, outpacing the Zacks Consensus estimate of $21.5 billion. Loss before interest and taxes came in at $95 million, way narrower than the year-ago loss of $2,089 million.

In North America, revenues surged 37% year on year to $15 billion for the reported quarter. The metric also surpassed the Zacks Consensus Estimate of $14.3 billion. Wholesale volume edged up 20% from the year-earlier quarter to 327,000 units. EBIT totaled $194 million, turning around from a loss of $974 million in the corresponding quarter of 2020, thanks to favorable pricing strategy and product mix.

In South America, revenues rose 124% year over year to $0.5 billion for the second quarter and topped the consensus mark of $0.3 billion. Wholesale volume grew 25% from the year-ago quarter to 18,000 units. The unit’s pretax loss narrowed from $165 million in the prior-year quarter to $86 million amid cost cut and rejig efforts.

In Europe, revenues soared 55% year on year to $5.6 billion for the June-end quarter, topping the consensus mark of $4.5 billion. Wholesale volumes scaled up 18% year over year to 182,000 units and pretax loss totaled $284 million, narrower than the year-ago loss of $664 million, thanks to aggressive restructuring initiatives.

In China, revenues declined 31% year over year to $0.6 billion for the reported quarter. Wholesale volume tapered off 11% from the prior-year figure to 150,000 units. However, pretax loss narrowed from $136 million a year ago to $123 million for the quarter under review.

In the International Markets Group, revenues were up a whopping 141% from the year-ago figure to $2.5 billion. Wholesale volume rallied 138% from the prior-year level to 87,000 units and pretax earnings totaled $204 million against $150 million loss incurred in the comparable year-ago period.

Second-quarter revenues from the Ford Credit unit declined 5% year over year to $2,603 million. Revenues from Ford Mobility came in at $21 million, tripling from the comparable year-ago level.

Financial Position

Ford reported negative adjusted free cash flow (FCF) of $5,125 million during the quarter, which deteriorated from the prior-year negative FCF of $4,758 million. It had cash and cash equivalents of $22,955 million as of Jun 30, 2021 compared with $25,243 million on Dec 31, 2020. Automotive long-term debt increased to $23,776 million on Jun 30, 2021 from $22,633 million as of 2020-end.


Ford — which shares space with auto biggies including General Motors (GM - Free Report) , Tesla (TSLA - Free Report) and Volkswagen (VWAGY - Free Report) — raised EBIT and FCF projections for 2021. FCF is now envisioned in the band of $4-$5 billion, up from previous guided range of $500 million to $1.5 billion. The Zacks Rank #1 (Strong Buy) company now forecasts full-year 2021 EBIT within $9-$10 billion, higher than the prior view of $5.5-$6.5 billion. While second-half 2021 sales volume is likely to grow 30% from the first half, operating profit will be weaker than the first-half level due to higher commodity costs, lower earnings by Ford Credit and investments in the Ford+ plan. Weaker EBIT levels in second-half 2021 will reflect a non-cash gain of $902 million on Ford’s investment in Rivian that was booked in first-quarter 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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