Ford shares and debt gain on higher EBIT guidance, even as 3Q21 earnings dip YoY – Market React

Ford Motor Co’s debt and equity rose today after the automaker increased guidance for FY21 adjusted EBIT, despite reporting a dip in 3Q21 earnings yesterday after the close. The company also reinstated its quarterly dividend. 

The company raised FY21 adjusted EBITDA guidance to USD 10.5bn – USD 11.5bn, from previous expectations of USD 9bn – USD 10bn. Ford maintained expectations for adjusted free cash flow of USD 4bn – USD 5bn.

Shareholders will get a 10 cents per share payout in the fourth quarter. The dividend was suspended since March 2020, where it previously paid a quarterly dividend of 15 cents per share.

For the quarter ended 30 September, revenue totaled USD 35.7bn, compared to USD 37.5bn for the same period last year. Adjusted EBITDA amounted to USD 3bn, down from USD 3.6bn in 3Q20. 

Ford CFO John Lawler declined to give financial guidance for 2022, but said the company expects the chip shortage to continue into next year and potentially, to a lesser extent, into 2023.

Lawler also said Ford expects a 10% increase in wholesale vehicle volumes in 2022 compared to this year, as the semiconductor shortage continues to impact the business.

The automaker started the quarter with 60,000 – 70,000 unfinished vehicles awaiting chips and related components. Lawler said it ended the quarter with 27,000 partially-built vehicles and is expected to drop below 5,000 by the end of 2021.

Ford’s shares traded today as high as USD 17.46 per share and a USD 67.731bn market cap, up 12.6% from yesterday’s close. 

Its USD 2bn 4.75% senior unsecured notes due 2043 traded today at 109.125 to yield 4.101%, compared to trades at 107.5 to yield 4.211% yesterday, according to MarketAxess. The borrower’s USD 1.25bn 4.125% senior unsecured notes due 2027 popped to 106.18 to yield 2.926% today, compared to trades at 105.19 to yield 3.114% on 26 October, while its USD 1.65bn 4% senior unsecured notes due 2030 climbed to 104.53 to yield 3.399%, compared to 103.375 to yield 3.55% on 26 October, according to MarketAxess. 

Also in the space, General Motors beat its earnings estimates for 3Q21 yesterday, but the company lowered its adjusted automotive free cash flow guidance for 2021. The company now expects USD 1bn of free cash flow, down from previous expectations of USD 1bn – USD 2bn. The decline is a result of spending required to finish vehicles that were previously built without chips. 

During yesterday’s earnings call, GM CEO Mary Barra said the semiconductor shortage is improving, but the company expects the shortage to continue into the first half of 2022.

GM’s equity rose to USD 55.51 per share and a market cap of USD 79.772bn today, up 2.3% from yesterday’s close. 

2021 Debtwire

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