Ford Motor Co. in Dearborn CFO John Lawler declared today during the virtual Barclays Global Automotive and Mobility Tech Conference that the company has “absolute confidence” in the post-strike long-term potential of its Ford+ plan to generate growth and value.
Lawler says Ford now anticipates full-year 2023 adjusted earnings before interest and taxes of $10.0 billion to $10.5 billion. That would include $1.7 billion in strike-related lost profits — $1.6 billion of that from the fourth quarter — owing to interruptions in production of high-margin trucks and SUVs and, in turn, vehicle wholesales about 100,000 units lower than planned.
Ford withdrew 2023 financial guidance in late October during the UAW strike of certain U.S. operations. With a new labor agreement since reached and ratified, the company is providing updated financial expectations.
Ford generated $4.9 billion of net income and $9.4 billion in adjusted EBIT through the first three quarters of the year, prior to full effects of the work stoppage. Full-year 2023 adjusted free cash flow is expected to be between $5.0 billion and $5.5 billion.
What hasn’t changed, says Lawler, is Ford’s conviction in the Ford+ plan to build an automaker that thrives at the intersection of hardware, software, and services in a rapidly evolving industry.
“This industry is going through the biggest technology-led transformation we’ve ever seen and some companies, new and old, are going to be left behind,” Lawler said before the conference. “Ford+ is the right strategy to win — we’ve got a highly talented team that allocates capital with great discipline, so that we’re executing with consistency, generating strong growth and profitability, and are less cyclical.”
Lawler says Ford’s customer-centered businesses — Ford Blue for gas and hybrid vehicles, Ford Model e for electric vehicles, and Ford Pro for commercial customers – provide for transparency, flexibility, accountability, disciplined capital allocation, and increasingly differentiated performance. Customers of all three of the businesses will benefit from Ford’s emerging software and services capabilities.
The new U.S. labor agreement with the UAW is expected to cost $8.8 billion over the life of the contract, with gross wages, accelerated wage progression and cost of living adjustments representing the largest three elements of that total.
Lawler says again that the cost effect is anticipated to be about $900 per vehicle by 2028 — or about 60 to 70 basis points of adjusted EBIT margin — which Ford will work to offset through higher productivity and lower expenses.
Ford plans to report fourth-quarter and full-year 2023 financial results — and provide initial guidance about its financial expectations for full-year 2024 — after the close of business on Tuesday, Feb. 6, 2024.
In other Ford news, Ford’s 2024 Trend Report stated that the world is in flux, and that there is a seismic shift in how people prioritize their lives. From prioritizing self-care to the impact of Artificial Intelligence on jobs, the report offers a fascinating glimpse into the future and the emerging trends that will shape it.
Each year, Ford focuses on global trends to gain insight into evolving consumer behavior, what the company needs to understand about these behaviors and how to use the learnings to inform future strategies for engaging with them.
The report also stated that people are seeking a better work-life balance and are willing to accept the potential sacrifices that come with prioritizing their own well-being. In fact, half of the global workforce would accept a 20 percent pay cut in favor of prioritizing their quality of life. But that doesn’t mean they don’t care about their jobs.
Additionally, the report showed that AI and ChatGPT have become household words, with individuals and businesses alike seeking to leverage their capabilities. While most people anticipate that AI will become integral to their lives in the near future, there’s an increased sense of uncertainty and confusion compared to a few years ago.
The rapid pace of change has led to concerns about the potential impact of AI on others — even more so than on themselves. Nevertheless, there is a consensus that AI is here to stay and will continue to play an increasingly significant role in our daily lives.
And people are seeking a global consensus on the urgency of addressing climate change, with many claiming to be modifying their personal habits to be more environmentally friendly.
But the reported noted that people want a seamless integration of sustainable solutions into their everyday routines. They seek simplicity where products, services, and experiences allow them to make positive contributions to the environment without disrupting their lifestyle.
While the future of transportation is moving towards electricity, some are hesitant to adopt electric vehicles (EVs) over concerns about insufficient infrastructure making charging a challenge. It will be up to companies to make sustainability an easy, convenient choice if consumers are expected to embrace it.
To view the full report, visit here.
