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Ford (F) Q4 Earnings Lag on Struggles in Europe & China

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Ford Motor Company (F - Free Report) reported fourth-quarter 2018 adjusted earnings per share of 30 cents, missing the Zacks Consensus Estimate of 31 cents. In the prior-year quarter, adjusted earnings were 39 cents per share. Results were impacted by challenges faced by the company in markets of China and Europe.

Adjusted EBIT in the third quarter was $1.5 billion, reflecting a decrease from $2 billion recorded in the year-ago quarter.

During the reported quarter, Ford logged automotive revenues of $38.7 billion, up from the prior-year quarter figure of $38.5 billion. The Zacks Consensus Estimate for revenues was $37 billion.

Ford Motor Company Price, Consensus and EPS Surprise

 

2018 Results

In 2018, the automaker reported an adjusted EBIT of $7 billion or $1.30 per share, down from adjusted EBIT of $9.6 billion or $1.78 per share in the previous year.

Revenues for the year went up 2% year over year to $160.3 billion.

Ford Automotive

During the reported quarter, wholesale volume at the Ford Automotive segment declined by 275,000 units to 1.47 million. Earnings before income and taxes (EBIT) were $1.1 billion, a decline of $500 million from the year-ago quarter.

In North America, revenues increased by $1.7 billion year over year to $25.8 billion during the reported quarter. Wholesale volume declined by 1,000 units to 738,000. Further, EBIT was $2 billion, marking an increase of $200 million from the year-ago quarter. This rise is majorly due to the favorable mix and higher net pricing.

In South America, revenues slumped by $500 million year over year to $1.2 billion. Pre-tax loss amounted to $199 million, owing to weak major markets except for Peru. Moreover, wholesale volume declined by 18,000 units to 89,000.

In Europe, revenues increased by $700 million to $7.4 billion. Wholesale volumes slumped 55,000 units to around 361,000. The region incurred Pre-tax loss of $199 million, owing to lower volume, high costs and currency fluctuation.

In the Middle East & Africa segment, revenues declined by $1 million year over year to $700 million due to lower volume. Further, wholesale volume declined by 3,000 units to 32,000. The region recorded a pre-tax loss of $49 million.

In the Asia Pacific region, revenues decreased by $200 million to $3.6 billion. Wholesale volume declined by 198,000 units to 254,000. Further, the region incurred pre-tax loss of $381 million.

Other Segments

Ford has two other segments namely Ford Credit and Mobility. During the fourth quarter, Ford Credit generated EBT of $663 million. The Mobility segment had pre-tax loss of $195 million due to increased investment in the development of mobility services and the autonomous vehicle business.

Financial Position

Ford had cash and cash equivalents of $16.7 billion as of Dec 31, 2018, compared with $18.5 billion as of Dec 31, 2017.

2019 Guidance

For 2019, the company projects year-over-year growth in key financial metrics, and maintain cash and liquidity levels at or above its targets of $20 billion and $30 billion, respectively.

Zacks Rank & Stocks to Consider

Ford currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader auto sector are Dana Incorporated (DAN - Free Report) , Cooper Tire & Rubber Company (CTB - Free Report) , and Bridgestone Corporation (BRDCY - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dana has an expected long-term growth rate of 2.9%. Share price of the company has increased 30.1% in the past month.

Cooper Tire has an expected long-term growth rate of 4%. Over the past month, shares of the company have gained 9.5%.

Bridgestone has an expected long-term growth rate of 4.7%. Shares of the company have gained 1.2% in the past month.

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