Ford Motor Company (NYSE: F) stock falls on weak forecasts

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Ford Motor Company (NYSE: F) stock fell over 6.6% on 24th October, 2019 (as of 11:40 am GMT-4 ; Source: Google finance) after the company provided fourth quarter forecasts below analysts’ estimates. The company reported 57% fall in the net income compared to a year ago to $425 million on back of $1.5 billion in special items that included $800 million for the restructuring in India as part of a global turnaround plan led by Hackett. However, the adjusted earnings for the quarter were up 8% to $1.79 billion from a year ago. The company improved in North America, which is its most lucrative market, where the company posted 2.5% increase in pretax profits to be about $2 billion. Ford has lost $281 million in China, but that was better than a $378 million loss a year ago.

F in the third quarter of FY 19 has reported the adjusted earnings per share of 34 cents, beating the analysts’ estimates for the adjusted earnings per share of 26 cents, according to Refinitiv consensus estimates. The company had reported 2 percent decline in the adjusted revenue to $37 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue of $36.87 billion. The revenue fell partly due to the launch of the new Ford Explorer SUV. Sales of the highly profitable Explorer fell 48% during the third quarter as quality problems forced the company to hold shipments to dealers.

The company expects to make less profit than previously expected for the year, and has lowered its 2019 earnings guidance to range between $6.5 billion and $7 billion, which means expected EPS to be between $1.20 and $1.32 per share. The company was previously expecting to earn between $7 billion and $7.5 billion, or between $1.20 and $1.35 per share.

The downward change in guidance is to higher than expected warranty costs and incentive spending as well as weakening sales in China. Ford retained its free cash flow forecast to be of $2.8 billion or more for the year.

Meanwhile, the company as part of the restructuring, has slashed about 10% of its white collar workforce, about 7,000 employees, earlier this year. Ford expects the restructuring to cost in the range of $3 billion to $3.5 billion in earnings before interest and taxes for the year, including $3.3 billion during the first three quarters.

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