General Motors (NYSE: GM) and Ford Motor Company (NYSE: F) posted mixed Q4 results, while GM beat analyst expectations despite a rocky year, it joins Ford with weak guidance for 2020.
It's no secret that GM had a rough year in 2019, between declining domestic and international sales and a lengthy union strike, in addition to a volatile global market, GM had no end of complications that by all accounts should have put the company in the red for the year. Despite the turbulent year, GM managed to end the year in the black. GM managed to post a profit of $6.58 billion for the year, which, while down from 2018, was still enough to help the company beat expectations. The report is somewhat surprising, not just because of the various issues the automaker faced, but because the company posted serious losses in Q4 due to the United Auto Workers strike. The company posted earnings of 5 cents per share, decently ahead of Wall Street's expectations of a single cent.
GM's rival Ford, however, did not fare nearly as well, coming in well short of Wall Street's expectations. Ford's adjusted operating income dropped sharply, clocking in at $485 million, 67% lower than last year. The company stated that the loss was largely attributed to rising costs. Earnings per share were down as well, coming in at 12 cents per share, 60% lower than last year and just below Wall Street's forecast of 15 cents. The main catalyst for Ford's dismal earnings is likely the company's drastically reduced performance in North America and China. In North America, Ford's earnings clocked in at $700 million, a sobering $2 billion drop from last year, while in China, the company lost $771 million, which is less than the company lost last year, but still a significant loss.
GM and Ford share the same burden of weak guidance for 2020. Both companies exist in a volatile market upended by the U.S.-China trade war, fears of the Coronavirus, and lower consumer confidence. Weak guidance won't bode well for the companies, especially as both are set to make substantial gambles in the coming year. GM has already set plans in motion to rapidly expand its stake in the electric vehicle market, with an announced conversion of the former Hummer line into an all-electric truck brand, and a significant investment and partnership with LG which so far has yielded two battery plants to produce power sources for electric vehicles. Ford has similar plans to expand its electric vehicle production, with plans such as a sizable expansion to the company's Detroit operations to create a new manufacturing capacity for electric vehicles.
Both companies seem undeterred despite their mixed results, though whether or not investors share this enthusiasm remains to be seen. The best-case scenario for the automakers is that their gambles into electric vehicles and autonomous vehicles will reinvigorate a stagnate market and bring sizable dividends by the end of 2020.