Ford Motor Company reported operating losses of $2.1 billion in its electric vehicle division last year, but this was more than offset by operating profits of $10 billion in its fleet and internal combustion divisions.
The Detroit automaker anticipates similar results in 2023, projecting an adjusted loss for its EV unit of $3 billion, adjusted profitability for its internal combustion unit of around $7 billion, and adjusted earnings for its fleet business of about $6 billion.
The financials are the first in-depth examination of unit profitability as Ford introduces a new financial reporting structure intended to provide Wall Street with a clearer picture of how its electric vehicle business is developing and how profits from its internal combustion businesses are financing its transition to electric vehicles.
The re-formatted reports come after a broad reorganization that divided Ford’s global business into five business units in March 2022: “Ford Blue,” its traditional internal combustion engine business; a new “Ford Model e” electric vehicle unit; “Ford Pro,” housing its commercial and government fleet business; “Ford Next,” containing nonautomotive mobility solutions and other future tech; and its existing Ford Credit financial services subsidiary.
“We’ve essentially ‘refounded’ Ford, with business segments that provide new degrees of strategic clarity, insight and accountability to the Ford+ plan for growth and value,” CFO John Lawler said in a news release.
According to Lawler, CEO Jim Farley, and other senior Ford executives, the new reporting structure reflects how they are currently thinking about and running Ford’s operations.
Ford disclosed copies of its restated 2021 and 2022 financial statements on Thursday in order to provide analysts and investors with a basis for future comparison.
These updated figures reveal that while Ford Model e, the business’s electric vehicle division, lost $2.1 billion last year, Ford Blue and Ford Pro produced adjusted operating income of $6.8 billion and $3.2 billion, respectively.
When the business ramps up EV production, such Model e losses in 2022 more than treble unit losses in 2021.
Ford maintained on Thursday that it anticipates producing 2 million EVs annually by the end of 2026.
It intends to attain a 10% profit margin on an EBIT basis by that time, with an 8% adjusted EBIT margin for Ford Model e.
Wall Street experts had encouraged Ford to spin off its EV division prior to the announcement of the restructure.
Farley and other executives countered that by keeping the EV unit in-house, Ford Blue and Ford Pro would be able to take advantage of the manufacturing expertise and other advantages they currently possess.
In comparison to so-called “pure play” EV startup companies who had to establish manufacturing facilities from scratch, they said that this gave it a major edge.
With the new financial reporting structure, the company hopes to make it easier for analysts, investors, and other stakeholders to understand how profitable its core internal combustion businesses are.
Ford will hold a “teach-in” to explain the new reporting structure to investors and analysts at 10 a.m. ET on Thursday. The event will be streamed live online at Ford’s investor relations website.
The automaker will release its first-quarter financial results on May 2 and during its annual Capital Markets Day on May 22 will go into greater detail about its strategy and the status of its restructuring efforts.
CNBC
