Ford Motor Company made many investors happy on Thursday, reporting a less-than-feared loss in the second-quarter of 2020.
Despite the company’s chief financial officer predicting a Q2 loss of $5 billion or more three months ago, the automaker’s actual earnings before interest and taxes was only in the red $1.9 billion — a minor miracle given the stormy backdrop.
Thanks to a sizable gain ($3.5B) on its investment in self-driving tech firm Argo AI — a move arising from its mini-alliance with Volkswagen — Ford’s net income was $1.1 billion. Strip that away and the EBIT loss was $1.9 billion, far less than predicted. Naturally, Wall Street responded quickly in after-hours trading, with the company’s stock rising more than 4 percent.
Revenue of $16.6 billion last quarter, while down 54 percent over the same quarter a year earlier, outpaced estimates of just under $16 billion. The company claimed nearly $40 billion in liquidity at the end of Q2 and boasted of a $7.7 billion credit line repayment earlier this month.
Ford credited the minimized damage to a safe and “effective” restart of its domestic manufacturing facilities back in mid-May.
“I could not be prouder of the Ford team’s optimism and effectiveness as we manage through
this pandemic,” said CEO Jim Hackett in a statement. “We delivered a strong Q2 while keeping
each other safe, caring for customers and neighbors, and assuring tomorrow.”
Strong product (Ford says its retail market share rose more than 1 percentage point in Q2, helped by strong demand for the F-Series truck line) and enthusiastic demand for upcoming ones (Bronco) gives the automaker hope for the future. The company forecasts pre-tax earnings of $500 million to $1.5 billion in Q3.
Earlier this week, Detroit rival General Motors reported a second-quarter loss of $800 million.