US automaker Ford (NYSE: F) has surpassed earnings expectations for the fourth quarter of 2023 and is optimistic about higher profits in the coming year, despite facing hurdles such as increased labor costs and losses in its electric vehicle (EV) segment.

The company reported adjusted earnings per share of 29 cents for the fourth quarter, exceeding analyst estimates, with revenue reaching $46 billion for the period.

The company’s revenue saw a modest increase from $44 billion to $46 billion compared to the previous year, driven by strong sales of internal-combustion vehicles and light commercial trucks. Ford’s performance in the fourth quarter was also impacted by special charges related to employee pension programs and overseas operations reorganization, resulting in a loss of $526 million.

Ford’s gasoline and hybrid vehicle division reported earnings of $813 million before interest and taxes in the fourth quarter, with its commercial vehicle division earning $1.8 billion. Conversely, the electric vehicle unit incurred a loss of $1.6 billion.

For the full year of 2023, Ford reported a net income of $4.3 billion, while marking an 11 percent increase in revenue to $176 billion. However, its electric vehicle division, known as Model e, incurred a substantial loss of $4.7 billion before interest and taxes. This was attributed to competitive pricing dynamics and strategic investments in next-generation EV development.

These results follow a challenging period for the auto giant, which, alongside General Motors and Stellantis, grappled with a six-week worker strike that has since been resolved. Despite higher expenses expected for labor and product-refresh actions in the current year, Ford’s chief operating officer, Kumar Galhotra, expressed confidence, stating that the company is set to achieve $2 billion in cost reductions across its global industrial system.

Ford’s chief financial officer, John Lawler, emphasized the company’s commitment to electric vehicles despite current challenges, stating, “EVs are here to stay.” He underscored the importance of customer adoption and the long-term potential of EVs within Ford’s strategic framework, Ford+.

However, acknowledging the slower-than-anticipated mainstream adoption of EVs, Ford had previously announced the deferral of certain capital investments in the segment until demand and prospects for acceptable returns justify them.

Looking ahead to 2024, Ford anticipates earnings ranging between $10 billion to $12 billion before interest and taxes, compared to the $10.4 billion reported in the previous year.

Information for this briefing was found via The New York Times and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.