Ford Motor, following the resolution of union negotiations, has unveiled its financial guidance for 2023. The company projects an operating profit ranging between $10 billion and $10.5 billion.
Initially, Wall Street estimated the operating profit at $10.5 billion. However, previous guidance given in July anticipated a profit between $11 billion and $12 billion, which was later put on hold during the contentious labor negotiations with the United Auto Workers union.
The new guidance includes strike-related costs amounting to $1.7 billion. By excluding these costs, the revised range becomes approximately $11.7 billion to $13.2 billion.
Considering the performance in the first three quarters of the year, Ford is expected to generate around $2.5 billion in fourth-quarter operating profit, excluding any impact from strikes. Wall Street analysts predict around $900 million, although some may have factored in strike estimates.
Regardless of how these numbers are interpreted by investors, the guidance appears robust.
In premarket trading, Ford stock rose by 2%, with S&P 500 and Dow Jones Industrial Average futures seeing gains of 0.2% and 0.5% respectively.
GM Stock Soars on Strong 2023 Financial Guidance
Shares gained about 2% in Wednesday trading, fueled by a strong performance from General Motors (GM). The company’s stock soared more than 9% after GM announced its optimistic 2023 financial guidance.
A Profitable Outlook
GM expects to generate an operating profit between $11.7 billion and $12.7 billion in 2023. Although the previous outlook ranged from $12 billion to $14 billion, Wall Street analysts had projected $12.2 billion, aligning closely with GM’s new range.
Addressing Increasing Labor Rates
GM acknowledged that rising labor rates would increase the cost of producing each car by $500 to $600. However, the company reassured investors by revealing plans to gradually offset these increases over time.
Ford’s Strategy
Following suit, Ford estimates that the new labor deal will raise costs by approximately $800 per vehicle. However, similar to GM, the company has outlined plans to counteract this increased expense through enhanced productivity and reduced expenses.
Impact on Share Prices
Since labor issues began impacting investor sentiment in July, Ford and GM shares have plummeted by approximately 29% and 18%, respectively.
Fortunately, GM’s strong financial guidance may serve as a catalyst to restore investor confidence and bolster stock performance.