Ford shares skid despite a bullish 2022 outlook

Ford shares dipped as much as 5% in after-hours trading Thursday after the automaker's fourth-quarter income fell short of analysts' expectations

DETROIT - Ford Motor Co ended 2021 with $36 billion in cash, a crop of hot-selling new electric vehicles and a bullish forecast for revenue and profit growth this year, but that was not enough for investors.

Ford shares dipped as much as 5% in after-hours trading on Thursday after the automaker's fourth-quarter income fell short of analysts' expectations and the company forecast a slower recovery in 2022 vehicle production than rival General Motors Co.

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The sour response to Ford's results presents a challenge to Chief Executive Jim Farley, who is trying to accelerate the company's pivot toward electric vehicles.

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Ford said it has 275,000 orders for its electric F-150 Lightning, Transit vans and Mustang Mach-E utility vehicles, and expects to double electric vehicle production capacity to 600,000 vehicles a year by 2023.

Chief Financial Officer John Lawler said during a call with reporters that Ford expects 2022 earnings before interest and taxes to grow by 15% to 25%, outpacing the predicted 10-15% increase in vehicle production. Ford should hit an 8% pretax profit margin this year, a year ahead of schedule, he said.

Ford Motor Co ended 2021 with $36 billion in cash, a crop of hot-selling new electric vehicles and a bullish forecast for revenue and profit growth this year, but that was not enough for investors. (iStock)

But investors sold shares after Ford's fourth-quarter adjusted earnings per share of 26 cents fell 19 cents short of the 45 cents analysts were expecting, according to Refinitiv I/B/E/S.

Earlier this week, General Motors forecast a 25-30% production increase for this year compared with last year, and operating profit of $13 billion-$15 billion.

"While the 4Q print is a disappointment, we believe the more critical takeaway from the print is a solid ’22 guide," Credit Suisse analyst Dan Levy wrote in a note.

Lawler said the fourth-quarter result reflected worse-than-expected supply-chain problems.

"There are supply-chain disruptions that can impact any one of us in a quarter," he said. "You have to look at long term."

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Ford enters 2022 in a stronger financial position than it has enjoyed in years. The company said it has $36 billion in cash and $52 billion in liquidity. Those numbers include Ford's stake in electric truck and van maker Rivian Automotive Inc, valued at $10.6 billion at the end of 2021.

Despite a forecast that costs for steel, resins and other raw materials will rise as much as $1.5 billion to $2 billion, Lawler said Ford is confident it can boost production and hold strong prices to deliver pretax profit between $11.5 billion and $12.5 billion.

Ford plans to use some of its cash hoard to ramp up capital spending in 2022 to $7 billion to $8 billion from $6.2 billion in 2021, and execute $1.8 billion to $2.4 billion in restructuring.

For all of 2021, Ford reported an operating profit of $10 billion, and an operating margin of 7.3% for the year. Full-year net income of $17.9 billion included a gain on its investment in Rivian.

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Fourth-quarter net income rose to $12.3 billion from a $2.8 billion loss a year ago. Adjusted earnings before interest and taxes rose to $2.0 billion from $1.7 billion a year ago.