Ford Motor Company (NYSE:F) will report its third-quarter results after the U.S. markets close on Wednesday, Oct. 27. What should we expect?
What Wall Street expects
Wall Street analysts polled by Thomson Reuters expect Ford to report adjusted earnings per share of $0.26 on automotive revenue of $33.04 billion. That would be a decline from the third quarter of 2020, when Ford generated $0.42 in adjusted earnings per share on automotive revenue of $34.7 billion.
(For those new to investing in automakers, here's your key to the jargon: "Adjusted" figures exclude one-time charges and credits, to make year-over-year comparisons more straightforward. "Automotive" revenue excludes revenue from Ford Credit, the company's financial-services subsidiary, which helps us compare Ford's results to those from other automakers.)
How Ford's regional businesses performed in the third quarter
Sales of Ford's F-Series pickups fell 22% in the third quarter, despite high demand, as chip supplies limited production. Image source: Ford Motor Company.
Ford's sales in the third quarter were hit hard by a lack of inventory, largely a result of the ongoing global shortage of automotive-grade semiconductors.
- Ford's overall U.S. sales fell 27.6% from a year ago, and were down 31.5% from the third quarter of 2019, before the COVID-19 pandemic began. September was much better than July and August, as Ford was able to secure more chips and ship more vehicles to its dealers. But sales of Ford's F-Series pickups, its most important profit generators, were still down about 22% in the quarter from a year ago.
- Ford's sales in China were also hit by the chip shortage, as well as by ongoing COVID-19 restrictions and the flooding that hit parts of central China in July. Overall sales were down 8.5% to just over 150,000, but there was a bright spot: Sales of high-profit Lincoln models increased by 24% from a year ago, to about 23,800.
- Chip-supply woes hit Ford's European factories hard: Sales in Ford's traditional 20 European markets fell 35.2%, versus a 21.6% decline for the industry as a whole, as supplies of key models including the Fiesta and Focus were exceptionally tight. Ford's market share in the region fell about 1.3 percentage points from a year ago, to just 6.3%.
Data source: Ford Motor Company. The chart, created by the author, compares the total vehicles delivered (or in Europe, registered) by Ford in the third quarter of 2020 (in blue) and the third quarter of 2021 (in green).
There might be a big one-time charge
Ford said last month that it will record about $600 million in one-time charges before the end of the year related to its decision to close two factories in India. I think we should expect at least some of that total to appear in its third-quarter results.
Will Ford beat Wall Street's estimates again?
Last quarter, Ford was able to generate results that crushed Wall Street's estimates: Tight inventories meant that its total sales weren't great, but Ford didn't have to offer much in the way of incentives to move the metal.
Wall Street is clearly hoping for a repeat this time around, and they'll probably get it. I think it's likely that Ford's results will come in close to, or maybe a bit better than, the consensus analyst forecasts mentioned above.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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