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Ford (F) Q3 earnings preview: Analysts expect revenue to climb despite $1B in supply chain costs

Ford (F) reports its third-quarter earnings Wednesday after the bell. Although analysts expect revenue to climb YOY, earnings growth will be harder to achieve as the company has already warned investors of an over $1 billion impact from supply chain-related costs. Take a look at the Ford 2022 Q3 earnings preview below to see what you can expect later.

Ford updates investors on Q3 2022 earnings

Last month, Ford gave investors a glimpse of what they can expect from its Q3 2022 earnings. The big story was Ford forecasting to have around 40,000 to 45,000 vehicles sitting in inventory due to parts shortages.

The shortages “disproportionally include high-demand, high-margin models of popular trucks and SUVs,” according to Ford.

For this reason, Ford expects inflation-related supply chain costs to reflect an additional $1 billion from previous forecasts. Despite the added expenses, Ford predicts Q3 operating profit to be between $1.4 billion and $1.7 billion.

GM, which reported Q3 earnings yesterday, dealt with the same issue in the second quarter, delivering the previously unfinished vehicles while beating wall street estimates with a record $41.9 billion in revenue.

Analyst expectations and preview for Ford Q3 2022 earnings

Because of the added costs in the third quarter, analysts expect a decline in earnings despite rising revenues.

Ford quarterly revenue and EBIT (Source: Koyfin)

According to wall street estimates, Ford expects to report:

  • Q3 revenue of $36 billion to $37 billion
  • Q3 operating profit of around $1.8 billion

You may notice wall operating profit estimates are higher than Ford’s September guidance. With interest rates rising, car buying behavior has been a particular area of interest.

Another thing to watch will be how Ford’s stake (about 10%) in Rivian, with RIVN share prices up about 20% during the third quarter.

Other things to watch for in Ford’s third-quarter earnings

Ford is amid an ongoing restructuring plan designed to cut costs and boost profitability. Part of this plan is to transition to a nearly all truck, SUV, and electric vehicle portfolio (higher margin segments).

Ford’s vehicle sales reached 464,674 in Q3 2022, up almost 16% from the third quarter of 2021. The automaker achieved nearly 13% market share last quarter. Electric vehicle sales tripled in September, despite a slowdown in overall sales of almost 9%.

The automaker’s EVs continue to see soaring demand across its lineup with the Mustang Mach-E, F-150 Lightning, and E-Transit commercial van.

Ford plans to achieve a 50% electric vehicle share of total sales by 2030 with an annual run rate of over 600,000 by the end of 2023. Earlier this year, Ford ramped EV spending plans to $50 billion, up from $30 billion.

So far, Ford has stuck to its full-year guidance as it expects to turn around unfinished vehicles. According to analysts, if Ford adjusts full-year guidance or updates its EV goals, it will likely impact Ford’s stock.

Update: You can view Ford’s Q3 2022 earnings results here.

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Avatar for Peter Johnson Peter Johnson

Peter Johnson is covering the auto industry’s step-by-step transformation to electric vehicles. He is an experienced investor, financial writer, and EV enthusiast. His enthusiasm for electric vehicles, primarily Tesla, is a significant reason he pursued a career in investments. If he isn’t telling you about his latest 10K findings, you can find him enjoying the outdoors or exercising