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On
Tuesday, the automaker disclosed its plans to return an extra 18
cents per share in dividend on top of the regular 15 cents to
investors, joining rival General Motors in returning cash to
investors. GM shares were also up 1.8%.
The dividend payout is aimed at enhancing the firm's payout
ratio and distributing a portion of its substantial automotive
cash balance, which stands at $28.7 billion, to shareholders,
David Whiston, analyst at Morningstar said in a note.
"With this much cash plus credit lines giving over $46 billion
of year-end total automotive liquidity, we think Ford can handle
most bad 2024 macroeconomic news without sacrificing investing
for the future," Whiston added.
The Dearborn, Michigan-based company said it was targeting $2
billion in cost reduction, in a bid to offset expenses related
to the labor contract deal reached with the United Auto Workers
union.
Ford will reduce investments in new EV capacity to align with a
decrease in demand, as consumers opt for hybrid vehicles and
family SUVs due to price and charging concerns.
The next generation of Ford EVs will be launched "only when they
can be profitable," Marin Gjaja, head of the Model E EV
business, told analysts on Tuesday.
"We remain underweight on Ford, as we see pricing and cost
reductions assumptions as optimistic," Wells Fargo analysts
wrote in a note.
The carmaker also reported an adjusted profit of 29 cents per
share for fourth quarter ended December, beating analysts'
estimates of 14 cents.
Shares of Ford trade about 6.81 times forward profit estimates,
above rival GM's 4.26 multiple.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shailesh
Kuber)
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