Why Do Analysts Expect Ford’s Q3 2018 Revenue to Fall?



The trend in Ford’s revenue

In the second quarter, Ford Motor Company (F) reported revenues of $35.9 billion for its automotive segment, down 3.2% from Q2 2017. Its second-quarter automotive revenue was slightly higher than analysts’ estimate of $35.8 billion.

A 10% YoY (year-over-year) fall in Ford’s global wholesale volumes affected its automotive revenue in the second quarter despite an overall favorable product mix, net pricing, and foreign exchange. Now let’s take a look at what analysts are estimating for Ford’s third-quarter revenue.

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Key legacy automakers (XLY) Ford, General Motors (GM), Fiat Chrysler (FCAU), and Toyota (TM) generate a large portion of their revenues from North America. In 2017, Ford, Tesla, and GM garnered 60%, 53%, and 76% of their total revenues, respectively, from the US market. FCAU generated 62% of its revenues from the North American region in 2017.

Estimates for Q3 2018

Analysts estimate that Ford will report stagnated automotive revenue in the third quarter. According to these estimates, Ford’s third-quarter revenue is expected to be $33.6 billion this year without any notable YoY change. Investors pay attention to analysts’ estimates since they may reflect market expectations.

In the last couple of years, Ford has faced challenges in some markets, including Europe and regions of Asia. Its profitability in these regions has deteriorated. In the third quarter, its sales in China also weakened. As we saw in Part 2 of this series, its US vehicle sales in the third quarter fell, which could hurt its revenue.

In the next part of this series, we’ll see what analysts are estimating for Ford’s third-quarter profit margins.


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