DETROIT – Ford Motor reported its largest quarterly earnings miss in four years in its fourth-quarter results released , while simultaneously guiding for a rebound year in . The results highlight the challenges facing the automaker as it navigates a transition to electric vehicles and contends with unexpected costs.
Ford’s guidance projects adjusted earnings before interest and taxes (EBIT) between $8 billion and $10 billion, a significant increase from the $6.8 billion recorded in . The company also anticipates adjusted free cash flow of $5 billion to $6 billion, up from $3.5 billion the previous year. Capital expenditures are expected to rise to between $9.5 billion and $10.5 billion, compared to $8.8 billion in .
The fourth-quarter performance revealed a notable discrepancy between actual earnings and analyst expectations:
- Earnings per share: 13 cents adjusted vs. 19 cents expected
- Automotive revenue: $42.4 billion vs. $41.83 billion expected
The 32% miss on earnings per share represents the company’s first quarterly shortfall since and the most significant since the fourth quarter of , when results were 42% below consensus, according to LSEG data.
A primary driver of the earnings miss was the unexpected impact of roughly $900 million in tariff costs. These costs stemmed from delays in the implementation of credits for auto parts. Prior to these tariff impacts, the company had projected $7.7 billion in fourth-quarter EBIT, but the additional costs reduced that figure to $6.8 billion.
Ford CFO Sherry House also cited impacts from fires at a Novelis aluminum supplier plant in New York as contributing to the lower-than-expected earnings. Full operational capacity at the plant is not anticipated until mid-. This disruption is particularly concerning as the plant supplies aluminum for Ford’s highly profitable F-Series pickup trucks.
“We will see a billion-dollar benefit roughly in ; however, this year, due to the Novelis impact, we’re going to have tariffs increasing in order to secure aluminum that is roughly the same amount of that savings,” House explained to reporters. The net tariff impact is expected to remain roughly flat year-over-year at $2 billion in . The Novelis fire resulted in a $2 billion impact during the second half of .
Despite the fourth-quarter miss, Ford CEO Jim Farley and House emphasized the underlying improvement in the company’s core business. revenue reached a record $187.3 billion, a 1% increase from $185 billion in the prior year. Fourth-quarter revenue, however, declined by 5% year-over-year to $45.9 billion.
Looking ahead, Ford anticipates its traditional internal combustion engine and fleet operations will offset anticipated losses of $4 billion to $4.5 billion from its “Model e” electric vehicle unit in . Pre-tax earnings from the “Ford Pro” fleet business are projected to be between $6.5 billion and $7.5 billion, while the traditional “Blue” business is expected to generate $4 billion to $4.5 billion in earnings.
On an unadjusted basis, Ford reported a net loss of $8.2 billion for , the largest since the Great Recession in . This included $15.5 billion in special charges during the fourth quarter, largely related to a previously announced scaling back of its all-electric vehicle plans.
The company reported a fourth-quarter net loss of $11.1 billion, or $2.77 per share, compared to net income of $1.8 billion, or 45 cents per share, in the same period of . When adjusted for one-time charges, the company reported earnings of 13 cents per share.
The results underscore the complex challenges facing Ford as it attempts to balance the demands of its legacy business with the substantial investments required for a successful transition to electric vehicles. The tariff impacts and supply chain disruptions, particularly those related to Novelis, highlight the vulnerability of the automotive industry to external factors. The outlook suggests Ford believes it can navigate these challenges and deliver improved financial performance, but the company’s ability to execute its strategy will be closely watched by investors.
