Ford To See Revenue Fall in Q2 2019?

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Ford Motor

Ford Motors (NYSE: F), the American auto maker, is set to announce its Q2 2019 earnings on 24th July, 2019, followed by a conference call with analysts.  The market expects the company to report revenue of close to $35.2 billion in Q2 2019, which would be a decline of 2% y-o-y. Lower revenue is likely to be a reflection of global auto market uncertainty. Market expectation is for the company to report earnings of $0.32 per share in Q2 2019, higher than $0.27 per share in the same period of 2018.

Ford Revenues were reported as $160.3 billion in 2018. This included 6 main revenue streams:

  • Ford North America: $96.6 billion in 2018 (60.3% of Total Revenues). This includes the revenue earned by the company from its sales in the North America region.
  • Ford South America: $5.3 billion in 2018 (3.3% of Total Revenues). This includes the revenue earned by the company from its sales in the South America region.
  • Ford Europe: $31.3 billion in 2018 (19.5% of Total Revenues). This includes the revenue earned by the company from its sales in the Europe region.
  • Ford Middle East & Africa: $2.7 billion in 2018 (1.7% of Total Revenues). This includes the revenue earned by the company from its sales in Middle East and Africa regions.
  • Ford Asia-Pacific: $12.4 billion in 2018 (7.7% of Total Revenues). This includes the revenue earned by the company from its sales in the Asia-Pacific region.
  • Financial Business: $12 billion in 2018 (7.5% of Total Revenues). This includes revenue from the financial services provided for purchasing or leasing vehicles of the company.

 

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We have summarized our key expectations from the earnings announcement in our interactive dashboard – Ford’s Earnings: Performance and 2019 Forecast. In addition, here is more Consumer Discretionary data.

 

Key Factors Affecting Earnings:

Revenue expected to fall:

  • Ford’s revenue has fluctuated throughout the last few quarters. In the 4th quarter of 2018 it registered a revenue of $41.8 billion.
  • The company has seen fluctuations in revenue since Q1 2018. The fluctuation is due to the overall uncertainty in the global auto market. In Q1 2019 the revenue was $40.3 billion with only the North America Segment showing positive growth.
  • North America revenue is expected to be flat in 2019 at around $96.6 billion as the company focuses on consolidating its position after phasing out sedans.
  • In Europe the company is expected to continue the growth as it focuses on redesigning its operations. The revenue is expected to be around $31.8 billion.
  • Asia-Pacific revenue has seen a fall due to the big fall in unit sales, especially in China. The company is planning to give it more focus and expected revenue from the segment is $10.2 billion.

Trend in Expenses:

  • Ford’s Total expenses have moved similar to its revenue over the quarters. In Q1 2019, North America EBIT margin was at 8.7%, up 90 basis points, driven by strong net pricing and product mix. While outside North America, the company suffered an EBIT loss of $196M in Q1 2019 which was a $632M improvement from Q4 2018.

 

Full Year Outlook:

  • For the full year, we expect gross revenue to decrease by 1.1% to $158.5 billion in 2019. The decrease in revenue is mostly expected due to the overall global slowdown.
  • Gross Profit margin is expected to decrease slightly to around 20.8%.

 

Trefis has an estimate of $10.62 for Ford’s Valuation. Expectations of growth in China and Europe, along with better margins in the long term, are expected to improve profitability and, in turn, work as a tailwind for the company’s stock price.

 

 

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