Ford on Thursday retracted its full-year earnings guidance after posting an underwhelming third-quarter report. The announcement came on the same day company executives reached a tentative deal with the United Auto Workers union.
Ford generated $44 billion in revenue over the third quarter, $41.18 billion of which was accrued through its automotive operations. The former number denotes an increase of 11% and resulted in a net income of $1.2 billion. This represents an impressive recovery over the prior year period, which resulted in an $827 million net loss. Since the start of 2023, the company has remained focused on improving profitability through better management of its operations, partially in the hopes of avoiding a repeat of last year’s disappointing results. It seems that these efforts are working.
However, until yesterday, Ford was faced with a problem it did not have last year: the United Auto Workers strike. The company claims to have lost $1.3 billion since employee walkouts began in September, clouding forecasts for both its fourth-quarter and full-year earnings. Although the UAW may not have been the cause, given the strike began two weeks before the end of Q3, the manufacturer’s automotive revenue of $41.18 billion fell just short of the $41.22 billion forecast by the London Stock Exchange Group. As a result of the added uncertainty, the brand has withdrawn its earnings forecast for 2023 despite raising its expectations to between $11 billion and $12 billion at the end of the second quarter.
The move reflects a similar decision by General Motors, which also withdrew its earnings guidance while simultaneously posting its third-quarter report. Unlike Ford, GM’s earnings beat analyst expectations for the period, a revelation that quickly resulted in another strike against its Texas SUV plant. However, the F-150 manufacturer may be better poised to face the remaining months of 2023 than its Detroit-Three counterpart, considering its new deal with the UAW. GM seems to have made little progress toward a resolution with union leadership and may be facing a prolonged battle.
Contributing to the company’s financial anxieties, electric vehicle sales at Ford have failed to progress as fast as the automaker had hoped. In Q3, its EV division, which sold only 20,962 units, lost $1.3 billion, even as segment revenue grew 26%. Citing the costs of accelerating battery-powered car production in the face of stubbornly low demand, John Lawler, the manufacturer’s chief finance officer, revealed the brand would postpone $12 billion in EV investments. Speaking to reporters on Thursday, Lawler denied that Ford was canceling any projects. “We’re not moving away from our second-generation products,” he explained. “We are, though, looking at the pace of capacity that we’re putting in place.”