Ford Q4 2021 Earnings Preview

Q4 Expectations

Ford releases its financial results for Q4 2021 and Full 2021, on Thursday February 3 after market closes, coming from a blowout third quarter.

The company had then raised its full year guidance for adjusted earnings to $10.5 - $11.5 billion, from $9 - $10 billion previously [1]. It had not offered 2022 guidance, but markets will be looking for this year's outlook on this week's report.

According to investing.com earnings calendar at the time of writing, Ford is forecasted to announce Revenue of $41.23 billion in Q4, compared to $35.7 billion in the third quarter and $36 billion a year ago. [2]

Earnings are forecasted $0.4421/share, versus $0.51 in Q3 2021 and $0.34 in the fourth quarter of 2020.

Vehicle Sales

Ford has a very attractive line-up, while its push on the Electric Vehicles (EV) front, seems to be paying off. It sold 508,451 vehicles in the fourth quarter in the US, a 26.8% increase compared to Q3. [3]

Ford had drawn criticism a few years back, when it had announced it would be exiting the sedan segment, in order to focus on trucks and SUVs. SUV sales were up 12.3% 2021, compared to the previous year.

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It rose to second place, behind Tesla, in electric vehicle sales in 2021 in the US, due to strong performance of the Mustang Mach-E.

Its iconic F-series was the best-selling truck in America in the past year, for the 45th straight year and best-selling vehicle for the 40th year in a row.

China Sales were also solid, with more than 624,000 units in the past year – 3.7% higher compared to 2020. [4]

Ford on a Roll

The historic automaker, appears to have found its mojo under CEO Jim Farley and the Ford+ plan, based on which it aims to spend $30+ billion on electrification by 2025 and expects 40% of its global vehicle volume to be all-electric by 2030.

America's favorite pick-up truck is going electric, with the F-150 Lighting, which is expected to be delivered within the year. Production will nearly double to 150,000 units annually due to increased demand. [5]

The all-electric F-150 will compete against the Ford-backed Rivian and its R1T, which was named "Truck of the Year" by MotorTrend. [6]

Earlier in the month Ford, announced it made a gain of $8.2 billion from its equity investment in electric truck maker Rivian, following the latter's November 10 initial public offering. [7]

These two, are not the only players in the electric pick-up truck market though, as Chevrolet unveiled the all-electric Silverado, which is not expected to be delivered this year though. [8]

EV king Tesla, had turned heads when it had unveiled its futuristic Cybertruck back in 2019, but looks like it will not be released this year either, since Mr Musk said that Tesla "will not be introducing any new models this year", during last week's earnings call. [9]

Potential Headwinds

Ford seems to have the wind in its sails lately, but there are factors that could pose challenges, such as high inflation and the Fed's aggressive path towards monetary tightening, which have led Wall Street on a negative start to the year.

We haven't seen any announcement about debt issuing or new loans in order to fund its electrification plans, which could prove crucial in a future higher rates environment. Higher prices and interest rates however, could dent demand for cars.

Furthermore, chip and broader supply chain shortages, are expected to persist, even though Ford seems to have done a relatively good job in navigating those.

Market Movement

F.us surged almost 140% in 2021, while in the fourth quarter of the year was profitable, registering gains of nearly 45% during that period. January started on the front foot with 20+ year highs (25.93), but then dropped and heads towards a negative month, in line with the broader stock market.

Last week closed below the $20.00 mark, which it had surpassed for the time in 20 years, back in November. It is now vulnerable to 50% Fibonacci of the 2021 Low/High rise and the EMA20 (at around 17.15-16.60), with the next support provided at the 15.00 area and the ascending trend-line from last year's lows.

On the other hand, the correction is relatively shallow at this stage and F.us managed to avoid a close below the 38.2% Fibonacci. As long as it stays above this level and the EMA200, its upward aspirations are not canceled. These levels have the ability provide support and give it the opportunity to look again towards 25.93-26.15.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 31 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_financials/2021/q3/Ford-3Q2021-Earnings-Press-Release.pdf

2

Retrieved 31 Jan 2022 https://www.investing.com/equities/ford-motor-co-earnings

3

Retrieved 31 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_financials/2021/q4/December-2021-Sales-Release-Final.pdf

4

Retrieved 31 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_financials/2021/q4/Ford-China-Full-Year-2021-Sales-Increase-with-Significant-Lincoln-Gains.pdf

5

Retrieved 31 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_downloads/2022/F-150-Lightning-Production-Increase-OBO-Release-FINAL.pdf

6

Retrieved 31 Jan 2022 https://www.motortrend.com/news/rivian-r1t-2022-truck-of-the-year/

7

Retrieved 31 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_news/2022/01/Press-Release_Special-Items_1.pdf

8

Retrieved 31 Jan 2022 https://media.chevrolet.com/media/us/en/chevrolet/home.detail.html/content/Pages/news/us/en/2022/jan/ces/0105-2024-silverado.html

9

Retrieved 30 Jun 2022 https://www.youtube.com/watch

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