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Ford Q1 FY2022 Earnings Report Preview: What to Look For

Focus on F total automobiles sold

Key Takeaways

  • Analysts estimate adjusted EPS of $0.34 vs. $0.70 in Q1 FY 2021.
  • The number of automobiles sold is expected to fall YOY for the third straight quarter.
  • Revenue is expected to decline for the third quarter in a row as the company continues to struggle with supply chain disruptions.

Ford Motor Co. (F) has struggled to meet demand during the past two years due to chronic global supply chain disruptions unleashed by the economic shock of the COVID-19 pandemic. The disruptions have forced Ford to idle production at times due to a shortage of semiconductors, creating erratic sales and earnings growth. Now, the war in Ukraine has created new supply problems for the company in key markets.

Investors will be watching to see how these forces are impacting Ford's financial results when the company reports earnings on April 27, 2022 for Q1 FY 2022. Analysts expect adjusted earnings per share (EPS) to decline for the third straight quarter as revenue falls.

Investors will also be focusing on the total number of automobiles sold, a key metric to watch amid global supply chain disruptions and shortages of critical parts, such as semiconductors. Analysts expect the total number of automobiles sold to decline for the third straight quarter.

Despite Ford's erratic financial performance, its shares have outperformed the broader market over the past year. The stock oscillated between underperformance and outperformance between late April 2021 and mid-September 2021. It has outperformed ever since, though it is down sharply from its recent peak in January 2022. Ford's shares have provided a total return of 25.9% over the past year, well above the S&P 500's total return of 2.0%.

One Year Total Return for S&P 500 and Ford
Source: TradingView.

Ford Earnings History

Ford reported mixed results in its Q4 FY 2021 earnings report. Adjusted EPS missed analysts' expectations, falling 22.0%. It was the second straight quarter of declining adjusted EPS. Revenue, however, beat estimates. Revenue rose 4.8% year over year (YOY), a turnaround from the previous quarter's decline. The company noted that it experienced supply chain disruptions and its European business was especially impacted by semiconductor-related shortages.

In Q3 FY 2021, Ford reported mixed financial results. Adjusted EPS beat consensus estimates, but fell 22.6%. It was the first earnings decline since the second quarter of FY 2020. Revenue missed expectations, falling 4.9%. It was the first revenue decline since the final quarter of FY 2020. The company noted that availability of semiconductors remained a challenge but the situation had improved greatly from the second quarter.

Analysts expect Ford's financial performance to weaken in Q1 FY 2022. Adjusted EPS is expected to decline by more than half YOY, marking the third straight decline. Revenue is expected to fall 6.6% YOY, the fastest decline since Q4 FY 2020. For full-year FY 2022, analysts expect adjusted EPS to rise 22.9% as revenue increases 11.4%, which would be the fastest pace in at least eight years.

Ford Key Stats
  Estimate for Q1 FY 2022 Q1 FY 2021 Q1 FY 2020
Adjusted Earnings Per Share ($) 0.34 0.70 -0.23
Revenue ($B) 33.8 36.2 34.3
Total Automobiles Sold 971,500 1,061,000 1,125,000

Source: Visible Alpha

The Key Metric

As mentioned above, investors will also be watching Ford's total number of automobiles sold. The company produces and sells a full line of trucks, utility vehicles, vans, and cars. But to manufacture these vehicles, the company depends on global suppliers for different components. Shortages in key components can easily lead to disruptions in production. Surging demand for consumer electronics during the pandemic resulted in a global shortage of semiconductors, which have become key components in automobiles. The shortage has forced Ford and other automakers to scale back production, thus reducing the number of vehicles they are able to sell.

The total number of automobiles sold by Ford has been falling for a number of years. After rising 4.9% in FY 2015, growth in automobiles sold slowed to a pace of 0.2% in FY 2016. In 2017, the total number fell 0.7%. But that was only the beginning of the declines. The next year, autos sold sank 9.5% and then 9.9% in FY 2019. In FY 2020, total automobiles sold plummeted 22.3%. They fell another 5.8% in FY 2021. The one bright spot during the year was the second quarter, with autos sold rising 18.5% YOY. It was the first increase in at least 11 quarters. However, the declines resumed in the third and fourth quarters. In Q1 FY 2022, analysts expect autos sold to fall 8.4% YOY. For full-year FY 2022, analysts forecast a sharp rebound, with sales rising 10.3%. That would be the first annual increase since FY 2016.

Article Sources
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  1. Reuters. "Ford to halt F-150 pickup output in Kansas City due to chip shortage."

  2. Reuters. "Ford says European production hit by chip shortage, Ukraine conflict."

  3. Ford Motor Co. "Ford Motor Company Announces Details for

    Q1 2022 Earnings Conference Call," Page 1.

  4. Visible Alpha. "Financial Data."

  5. Ford Motor Co. "Strategic Progress of Ford+ Growth Plan, Solid Financials in ’21 Position Company for Connected EV Leadership in 2022, Beyond," Pages 1 and 2.

  6. Ford Motor Co. "Ford Achieves Strong Q3 Results, Raises Full-Year 2021 Guidance; Says Financial FlexibilityEnables Ample Investment in Ford+ Plan," Page 2.

  7. Ford Motor Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 1.

  8. Ford Motor Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 18 and 34.

  9. CNBC. "Ford’s first-quarter sales fell 17% as the automaker battled a chip shortage."

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