Ford Motor Co. (F) - Get Report shares traded sharply lower Wednesday after it posted weaker-than-expected fourth quarter earnings, and disappointing 2020 guidance, as legacy carmakers continue to struggle with rising emissions costs, weakening demand and the coronavirus outbreak in China.
Ford said adjusted earnings for the three months ending in December were pegged at 12 cents per share, down 60% from the same period last year and 3 cents shy of the Street consensus forecast. Group automotive revenues also missed analysts' estimates, falling 5.2% to $36.7 billion thanks in part to lower sales volumes in each of the carmaker's global regions.
Looking into 2020, Ford said it sees 2020 earnings in the region of $5.6 billion to $6 billion, well shy of the Street consensus of between $7.3 billion and $7.6 billion, and cautioned that it was too early to quantify the impact of the spreading coronavirus on its worldwide operations.
"My strong instinct is to want to tell you what the impact of this virus may be on our business and our guidance for this year. However, it's simply too early," CEO Jim Hackett told investors on a conference call late Tuesday.
"China is only now starting to come back from an extended New Year holiday, and many companies including Ford are currently hoping to resume large parts of their industrial operations next week," he added. "And that is most experts are already saying and we agree that it will take weeks to begin to understand the implications of the outbreak."
"In the meantime, we will describe our expectations for the business excluding the possible effects of the coronavirus," Hackett said. "It is possible, though, that we could absorb a modest impact from the virus within our guidance range."
Ford shares were marked 9.7% lower in early trading Wednesday to change hands at $8.28 each, a move that would erase all of the stock's gains over the past twelve months.
Ford's main U.S. rival, General Motors Co. GM, beat Wall Street earnings forecasts while booking a $3.6 billion charge linked to last year's strike lead by the United Autoworkers Union.
GM said adjusted earnings for the three months ending in December came in at 5 cents per share, four cents ahead of the Street consensus forecast. The figure isn't directly comparable to last year, however, given the $1.39 per share charge the group had to book for costs linked to last year's forty-day strike by GM members of the United Autoworkers Union. Group revenues, GM, said, fell 20% to $30.8 million, just shy of the Street consensus forecast of $31.1 billion
"We’d characterize the 2020 guidance as largely disappointing, albeit with some confusion," said Credit Suisse analyst Dan Levy. "Ford flagged headwinds of a back-end loaded product launch (incl. F-150), cost of CO2 compliance, increased investments in Mobility, lower Credit profit, and a higher tax rate."
"Yet for a year in which there were supposed to be multiple ‘shots on goal’ (i.e. Europe cost, NA product, China product, UAW non-repeat), we are left to wonder what specifically is dragging guidance below expectations when many of these headwinds were already expected," Levy noted.