Ford Motor Company's 2019 Guidance: Uncertainty

Ford's world headquarters building in Dearborn, Michigan.

Ford Motor Company (NYSE: F) said that it earned $7 billion before taxes and special items in 2018, down substantially from its 2017 result, in a preliminary release of its full-year earnings on Wednesday.

Ford traditionally previews its full-year results and gives guidance for the coming year at an annual investment conference in Detroit in mid-January; it did that on Wednesday morning. While it won't release its full earnings report until next week, we now have a pretty good idea of how Ford performed in 2018.

Ford's preliminary earnings: The raw numbers

Here's what Ford told us on Wednesday about its 2018 full-year earnings.

Data source: Ford Motor Company. "Adjusted" figures exclude the impact of one-time items. Ford's preliminary earnings release indicated that it took $1.43 billion in one-time charges in 2018, much of that in the fourth quarter. "EBIT" is earnings before interest and tax.

Ford is scheduled to release its complete fourth-quarter and full-year earnings report after the market closes on Jan. 23, next Wednesday.

How did Ford do in 2018?

Let's start with this: Ford met its revised 2018 guidance for adjusted earnings per share, but just barely. When it lowered its original guidance in July, Ford said it expected to earn between $1.30 and $1.50 per share on an adjusted basis in 2018, a range it reiterated in October . Its preliminary full-year result fell at the very bottom of that range.

In disclosures that accompanied its presentation, Ford said that its preliminary fourth-quarter adjusted EBIT was $1.46 billion, down from $2.03 billion in the fourth quarter of 2017. But Ford also said that it had a net loss of $116 million in the quarter, down from a profit of $2.52 billion a year ago, because of $1.18 billion in one-time charges. (A Ford spokesperson said that most of that total is due to noncash accounting charges related to the annual revaluation of the assets in Ford's pension plans.)

Ford's expectation for 2019: Uncertainty

Unlike in past years, Ford declined to give specific earnings-per-share guidance for 2019. CFO Bob Shanks said that while Ford's senior management is confident that its ongoing overhaul efforts will yield improvements in time, there are things outside of Ford's control (notably the uncertainties around Brexit) that could affect the timing of those improvements.

Shanks said that Ford sees the potential for improvement in several key metrics in 2019 versus 2018, including revenue growth, adjusted EBIT margin, and return on invested capital (ROIC). He also said that Ford is targeting revenue growth that is greater than the global gross domestic product growth rate, an adjusted EBIT margin of 8% or better, and adjusted ROIC in the "high teens" or better -- but it's not yet clear when all of that will arrive.

Shanks said that Ford may be able to provide more detailed guidance as the year unfolds. But right now, Ford's guidance boils down to this: Good things are coming, but we aren't yet sure if any will arrive in 2019.

For long-suffering Ford investors, that's frustrating to hear. But I think there's some reassurance to be taken from this: Rather than throw out numbers they might not be able to hit, Shanks and other Ford executives are giving us an honest assessment. It's not great news, but it does inspire some confidence.

10 stocks we like better than Ford

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Ford wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

John Rosevear owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.