Shares of Ford Motor Co. tumbled early Friday the most in four months after the carmaker missed earnings expectations, blaming poor execution and continued supply shortages.
Ford leadership reported after the market close Thursday the automaker lost $2.2 billion last year as it wrote down the value of two big investments and struggled with high costs and supply chain problems.
The company wrote down its investments in Rivian, a young electric truck-maker, by $7.4 billion; and Argo AI, a company developing autonomous vehicles, by $2.8 billion last year. Ford said Thursday that it had almost completely sold its stake in Rivian. In October, Ford said Argo was shutting down.
The Thursday results also showed Ford is struggling to balance its transition to electric vehicle production as the company counts on strong sales of its gas-burning F-Series pickups and Bronco SUVs to help finance the $50 billion that CEO Jim Farley has committed to developing and building EVs.
Overall, excluding special expenses, interest and taxes, Ford made a $10.4 billion profit last year, it said, roughly as much as in 2021. The automaker reported fourth-quarter profit, excluding some items, of 51 cents per share, short of the 62-cent average of analysts' estimates. On that basis, quarterly earnings before interest and taxes came to $2.6 billion, Ford said, shy of the $3.45 billion analysts had expected.
Shares of Ford Motor Co. fell as much as 11% early Friday in New York, its biggest intraday decline since Sept. 20, ultimately closing at $13.23 for a 7.6% loss on the day. The stock had climbed 23% this year before the earnings report.
Deutsche Bank on Friday downgraded its rating on Ford shares and expressed skepticism that management will achieve the $2.5 billion in cost savings Ford's targeting this year.
"Ford didn't provide any color on a tangible restructuring program that would generate such savings so rapidly," analyst Emmanuel Rosner wrote, saying the results "showcase considerable operational shortfalls and suggest meaningful downside risk to earnings."
Ford's performance was also hurt by a $600 million loss stemming from its joint ventures in China and about $12 billion in overall special expenses, including those related to Argo and Rivian, which has lost much of its value since going public in November 2021.
"We should have done much better last year," Farley said in a statement. "We left about $2 billion in profits on the table that were within our control, and we're going to correct that with improved execution and performance."
"To say I'm frustrated is an understatement," the CEO later told analysts on a conference call.
Ford is expanding its cost-cutting efforts, now looking to eliminate "considerably more" than the $3 billion in overall annualized expenses previously targeted by mid-decade, Chief Financial Officer John Lawler told reporters on a call.
Additional job cuts will be part of that, he said. In August, Ford eliminated about 3,000 positions, most of which were in the United States, and the German union IG Metall warned last month that it's expecting about 3,200 more jobs will be cut across Europe.
"We're going to be very aggressive," Lawler said Thursday. In an interview Friday with David Westin on Bloomberg TV, Lawler said "everything is on the table" when asked about head-count reductions.
"We just need to do more with less," he said. "You have to drive productivity improvements. We're not where we need to be and so we're going to get there."
Ford faces about $5 billion worth of head winds this year, Lawler said, listing factors ranging from lower profit from its lending unit to higher spending on incentives. He expects Ford's pricing to be "flattish" even as average new-vehicle prices drop around 5%.
Ford anticipates a "mild" U.S. recession this year and a "moderate" one in Europe. It's also expecting a strong U.S. dollar to drag down its results.
For 2023, Ford forecast adjusted earnings of $9 billion to $11 billion before interest and taxes, compared with an average estimate of $9.94 billion.
Ford aims to increase production of EVs to 600,000 annually by the end of this year and reach a 2-million-vehicle yearly run rate by the end of 2026.
But with competition in the EV segment accelerating and growth slowing, Ford was forced to slash prices on its plug-in pony car, the Mustang Mach-E, in response to deep price cuts by market leader Tesla.
Ford's revenue in the fourth quarter increased 17% to $44 billion, beating the $39.8 billion that analysts expected. Fourth-quarter revenue at rival General Motors totaled $43.1 billion, while Tesla posted $24.3 billion.
Ford more than doubled sales of EVs in the U.S. last year and fortified its position as the No. 2 seller of battery-powered models, behind Tesla, which controls almost two-thirds of the American EV market.
Ford sold 1.15 million vehicles in the fourth quarter, an increase from 1.1 million a year earlier but about 500,000 fewer than the company had expected, Lawler said.
Ford's production has been slowed by the global shortage of computer chips, and Lawler said the company expected some disruptions to continue this year amid a slight increase in production volume.
Information for this report was contributed by Keith Naughton and David Westin of Bloomberg News (WPNS), and Neal Boudette of The New York Times.