Ford's Future Earnings Outlook Dims Despite Strong Q4 Performance
Discover why Ford's stock is falling as the automaker forecasts lower earnings due to challenges in its electric vehicle segment, despite surpassing quarterly revenue expectations.
HIGHLIGHTS
- Ford's shares are declining sharply following a cautious earnings forecast overshadowed by significant losses in its electric vehicle division.
- The EV branch, Ford Model e, reported a substantial EBIT loss of $5.1 billion for 2024.
- CEO Jim Farley warns that proposed tariffs on Canada and Mexico could eliminate billions in industry profits and impact jobs.
Ford's stock experienced a notable drop Thursday morning after the company revealed a less optimistic earnings outlook, primarily due to ongoing losses in its electric vehicle operations, which offset better-than-expected quarterly results.
Based in Dearborn, Michigan, Ford projects adjusted earnings before interest and taxes (EBIT) for 2025 to range between $7.0 billion and $8.5 billion, a significant decrease from the $10.2 billion reported in 2024. The company cited challenging market conditions as the main reason for this downward revision.
Ford Model e, the automaker's EV division, reported a 2024 EBIT loss of $5.1 billion, reflecting continued investments in future product development. The division anticipates a 2025 EBIT loss between $5.0 billion and $5.5 billion. CEO Jim Farley highlighted increased competition and pricing pressures within the EV market during the February 5 earnings call, whose transcript is available via AlphaSense.
Nevertheless, Ford's fourth-quarter revenue reached $48.2 billion, marking a 5% increase year-over-year, with adjusted earnings per share (EPS) of 39 cents—both figures exceeding analyst expectations from Visible Alpha.
CEO Farley Highlights Impact of Tariffs on Industry
During the earnings call, Farley expressed concerns about the Trump administration's proposed tariffs on trade partners Canada and Mexico, emphasizing their potential to raise costs for consumers and disrupt the automotive sector.
"Sustained tariffs at a 25% rate from Canada and Mexico could severely impact our industry, wiping out billions in profits and negatively affecting U.S. jobs and the entire automotive value chain," Farley stated.
Ford's shares fell over 6% in early trading Thursday, having lost more than 20% of their value over the past year.
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