Ford Motor exceeded Wall Street expectations as well as the company's forecast earnings for the third quarter due to unexpectedly strong demand during the coronavirus pandemic.
This is Ford's performance compared to Wall Street's expectations based on average analyst estimates made by Refinitiv.
Adjusted EPS: 65 cents versus 19 cents expected Automotive revenue: $ 34.71 billion versus $ 33.51 billion expected
Ford's stock rose more than 7% during after-close trading before hovering around $ 8.05 per share, up 4.5%. The stock closed at $ 7.70 on Wednesday, down 2.8%.
Jim Farley promised Wall Street more transparency in his first quarterly earnings call with analysts as CEO – something his predecessor Jim Hackett had criticized. Farley succeeded Hackett on October 1.
"My commitment to each of you is transparency, including targeted, measurable performance indicators so you can objectively track our progress," he told analysts. Farley said additional information, including financial goals, will be discussed in the spring.
Ford more than doubled its adjusted pre-tax profit from a year earlier to $ 3.6 billion in the third quarter. The company's net income for the third quarter was $ 2.34 billion, compared to approximately $ 423 million a year earlier. Total revenue also increased by around $ 500 million to $ 37.5 billion from the third quarter of 2019.
"We did very well this quarter," said Ford CFO John Lawler at a news conference on Wednesday. "We saw a lot more demand than expected."
Ford's third quarter earnings were led by its North American operations, which achieved $ 3.18 billion on sales of $ 25.3 billion. This included stronger than expected demand and a rich mix for popular Ford trucks and SUVs, as well as commercial vehicles.
Incoming Ford CEO Jim Farley (left) and Ford CEO Bill Ford Jr. pose with a 2021 F-150 during an event on September 17, 2020 at the company's Michigan facility where the pickup truck is manufactured.
Michael Wayland / CNBC
Due to costs related to new or redesigned vehicle launches towards the end of the year, the company projected an adjusted profit between breakeven and a loss of $ 500 million for the fourth quarter. That would keep the company in the black for the year.
Ford expects wholesale shipments of its profitable F-150 pickups to drop by 100,000 in the fourth quarter as the company continuously ramped up production of a revamped version of the truck, Lawler said.
Former Ford CFO Tim Stone, who left the company earlier this month, told investors in July that the automaker had expected third-quarter earnings on an adjusted pre-tax basis of between $ 500 billion and $ 1.5 billion. That would have been a drop of $ 1.8 billion in the third quarter of 2019.
Ford ended the third quarter with nearly $ 30 billion in cash and more than $ 45 billion in total cash, after drawing on $ 15 billion in revolving loans in the first quarter in the early days of the pandemic had been repaid in full.
Lawler declined to comment on when the company expects to reinstate its estimated dividend it suspended in March due to the pandemic.
Ford's shares are down 17% so far this year, despite a 15% rise in October.