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Stock Analyst Update

First Quarter the Start of Ford's Coronavirus Woes

Ford’s first-quarter results suffered hard from COVID-19 and the worst is yet to come.


Ford’s (F) first-quarter results suffered hard from COVID-19 and the worst is yet to come. First quarter adjusted diluted EPS was a loss of $0.23 which fell short of Refinitiv’s consensus of a loss of $0.12. Management understandably does not want, or have the visibility, to give guidance but did say it expects a second quarter adjusted EBIT loss of over $5 billion. That metric was a $632 million loss in the first quarter with at least $2 billion of lost EBIT from COVID-19. Second quarter 2019 total company adjusted EBIT was $1.65 billion. After factoring in a worse 2020 than already modeled, our fair value estimate falls by $1 to $8. We note though that there is much uncertainty around the cadence of production resuming so second quarter may end up being better than a loss exceeding $5 billion. First quarter free cash burn excluding Ford Credit was $2.4 billion.

Europe will start gradual production on May 4 and The Wall Street Journal recently said the Detroit Three may restart U.S. plants on May 18, but discussions are still ongoing with authorities and the UAW. China is already back to work but Ford will likely still lose money there. First quarter’s China loss was $241 million versus a $128 million loss in first quarter 2019. All segments lost money except Ford Credit and North America; the latter made $346 million versus a $2.2 billion profit in the prior year’s quarter. South America was the only segment which improved year over year, thanks to restructuring cuts, but it still lost $113 million.

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David Whiston does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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