Auto stock under pressure: Ford Motor Company (NYSE: F)

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Ford Motor Company (NYSE: F) stock crashed over 9.9% on 5th Feb, 2020 (as of  11:05 am GMT-5; Source: Google finance) as the company posted lower than expected results for the fourth quarter of FY 19 on increased pension contributions and higher North American warranty and labor costs. The company’s net loss was $1.7 billion wider than a loss of $0.1 billion in the previous year quarter. Fourth-quarter adjusted free cash flow was $498 million, down 67 percent

Ford Motor in the fourth quarter of FY 19 has reported the adjusted earnings per share of 12 cents, missing the analysts’ estimates for the adjusted earnings per share of 15 cents. The company had reported 5 percent fall in the Automotive revenue to $36.7 billion in the fourth quarter of FY 19, missing the analysts’ estimates for Automotive revenue of $36.49 billion. The company has reported the Adjusted earnings before interest and taxes (EBIT) of $485 million, which is down 67 percent, with improved results in China and Europe more than offset by a decline in North America. Ford’s Automotive EBIT for the quarter was 81 percent lower to $215 million.  The gains in net pricing and product mix, particularly in North America, were more than offset by lower launch-related volumes; higher costs for new products; unfavorable currency exchange; and UAW contractrelated costs.

Moreover, Europe had generated $21 million in EBIT in Q4 compared to a loss of $199 million a year ago and improved to nearly break-even for the full year. Ford’s fourth-quarter operating loss in China was 61 percent smaller than in the same year-ago period, on the back of lower structural costs. In South America, the company had exited production of heavy trucks and discontinued unprofitable sedan models, closing a plant in São Bernardo.

The company has projected full-year earnings to be in the range of 94 cents and $1.20 a share while the consensus estimates EPS of $1.26 and adjusted earnings before interest and taxes to be in the range of $5.6 billion and $6.6 billion. Ford expects adjusted free cash flow to be in the range of $2.4 billion and $3.4 billion in 2020. Capital expenditures are expected to be in the range of $6.8-7.3 billion.

For the first quarter, Ford expects adjusted EBIT to decline by more than $1.1 billion from last year as a result of the continuation of higher warranty costs seen during the second half of 2019, lower vehicle volumes, lower results from Ford Credit, and higher investment in Mobility.

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