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Ford Releases Underwhelming Q3 2022 Earnings Results, Records Net Loss of $827M

UTC by Tolu Ajiboye · 3 min read
Ford Releases Underwhelming Q3 2022 Earnings Results, Records Net Loss of $827M
Photo: Ford Motor Company / Facebook

According to the Ford Q3 2022 financial report, the company experienced a string of supply chain problems.

Ford Motor Company (NYSE: F) recently posted its Q3 2022 earnings report, revealing a massive $827 million net loss. According to the prominent automobile manufacturer, this was primarily a result of supply chain constraints. In addition, Ford also ascribed its Q3 2022 net loss to an investment gone south in the autonomous vehicle unit Argo AI.

Despite the loss, Ford narrowly surpassed Wall Street’s expectations for the period. However, the Michigan-based company’s guidance is at the lowest end of its previous forecast for 2022 earnings.

For the third quarter of this year, Ford raked in automotive revenue of $37.2 billion compared to $36.25 billion estimated. In addition, the American automobile manufacturer saw adjusted earnings per share of 30 cents for the same period. This came in 3 cents higher than the consensus estimate for the company’s Q3 outing.

Ford’s reported adjusted earnings of $1.8 billion for the quarter came in 40% lower than a year earlier. However, it also stands slightly higher than the company’s previously announced projections.

Following the release, Ford’s shares were down roughly 1% in extended trading.

Ford Q3 2022 Supply Chain Challenges

According to Ford, there was a shortage of raw materials during the third quarter, which affected 40,000 to 50,000 vehicles. In addition, the company also bore the brunt of an extra $1 billion in unexpected supplier costs. This saw Ford lose around $7 billion in market value and contributed to its worst stock performance in 11 years. Amid the fiasco at the time, Ford spokesman T.R. Reid chose to remain optimistic. He also noted that the car manufacturer continues to deliver on its Ford+ restructuring plan. In Reid’s own words:

“Markets are efficient over time, we’ve got a great plan at Ford+ to create value for customers, and investors and other stakeholders over time. It’s our obligation to execute against it and create that opportunity.”

At that time also, Ford doubled down on its full-year guidance. This sees adjusted earnings before interest and taxes sit between $11.5 billion and $12.5 billion. However, on Wednesday, the company updated its guidance to forecast full-year adjusted earnings before interest and taxes. The currently projected figure stands at $11.5 billion, and the automaker also raised its full-year adjusted free cash flow forecast. This projection now stands between $9.5 billion and $10 billion, up from its previously earmarked $5.5 billion to $6.5 billion. Ford made these guidance adjustments mainly because of its belief in the strength of its automotive operations.

Last month, Ford partially pre-released its Q3 results, setting investor expectations in the process. These included projected adjusted earnings before interest as well as taxes in the region of $1.4 billion to $1.7 billion. At the time, some analysts were angling toward a quarterly profit of around $3 billion.

Argo AI

Ford incurred a $2.7 billion expense on its investment in Argo AI during Q3. The Michigan-based company initially began investing in the AI firm back in 2017, before splitting ownership with German automaker Volkswagen in 2019.

According to Ford CFO John Lawler, the company is winding this down to focus on operations not considered “fully autonomous”. These include advanced driver-assist systems like its BlueCruise hands-free highway driving system.

Artificial Intelligence, Business News, Market News, News, Stocks
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