Ford Motor Co. (NYSE:F)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited significant volatility over the reviewed periods. Initially, there was a substantial loss in 2020. However, the following year saw a strong recovery with a notable profit peak in 2021. After this peak, NOPAT decreased considerably in 2022 and then showed modest improvements in 2023. By 2024, the profit increased markedly again, indicating a positive trajectory compared to the earlier years in the dataset.

Cost of Capital

The cost of capital experienced an upward trend from 2020 to 2021, rising from 6.5% to 8.46%. This was followed by a slight decline and relative stability around the 8% mark in 2022 and 2023. In 2024, there was a notable reduction to 7.02%, suggesting a potential decrease in perceived risk or changes in the market environment impacting the company’s capital costs.

Invested Capital

Invested capital demonstrated a general increasing trend across the period. After a decline from 2020 to 2021, invested capital steadily increased each subsequent year. By 2024, the capital base was at its highest level within the reviewed timeframe, indicating ongoing investment or asset accumulation activities by the company.

Economic Profit

Economic profit consistently showed negative values throughout the period, reflecting challenges in generating returns above the cost of capital. Although the deficit narrowed substantially in 2021 compared to 2020, economic profit worsened significantly in 2022 and 2023, reaching its lowest point. In 2024, there was an improvement, but negative economic profit persisted, implying that the company still struggled to create value beyond its capital costs despite the operational profit gains observed.

Net Income (Loss) Attributable to Ford Motor Company

There is significant volatility in the net income figures over the five-year span. The company experienced a substantial loss of $1,279 million at the end of 2020, followed by a remarkable recovery yielding a profit of $17,937 million in 2021. However, this was not sustained as a loss of $1,981 million was recorded again in 2022. The subsequent years show a positive trend with profits of $4,347 million in 2023 and $5,879 million in 2024, indicating improving profitability.

Net Operating Profit After Taxes (NOPAT)

NOPAT mirrors the patterns observed in net income but with less pronounced fluctuations. The figure was negative at -$428 million in 2020 but then increased sharply to $11,380 million in 2021. It declined substantially to $2,786 million in 2022 but then remained relatively steady with a slight increase to $3,005 million in 2023. In 2024, NOPAT shows a significant rise to $6,733 million, suggesting improved operational efficiency and profitability.

Overall Trends and Insights

The company's financial performance exhibits considerable cyclicality and recovery efforts throughout the reviewed period. After an initial loss in 2020, both profitability metrics surged in 2021 but could not be sustained into 2022. The recovery from 2022 onwards is steady, with both net income and NOPAT demonstrating growth, indicating improving operational results and successful management initiatives to increase profitability. By 2024, the positive momentum appears to strengthen, reflecting a more stable and profitable position.

Provision for (benefit from) income taxes

The provision for income taxes demonstrates significant volatility across the analyzed periods. In 2020, the provision was positive at 160 million US dollars, indicating tax expenses. This shifted dramatically in 2021 and 2022, where the company recorded negative provisions of -130 million and -864 million US dollars, respectively, suggesting benefits or tax credits during these years. Although still negative in 2023 at -362 million US dollars, the magnitude of the benefit decreased. In 2024, a notable reversal occurred, with the provision turning positive again to 1339 million US dollars, indicating substantial tax expenses compared to prior years.

Cash operating taxes

Cash operating taxes also varied markedly over the five-year horizon. The value was positive at 680 million US dollars in 2020, before plunging to a negative figure of -862 million in 2021, implying a cash inflow or tax refunds. In 2022, there was a significant increase to 2693 million US dollars, representing a sharp rise in cash outflows for taxes. This declined in subsequent years to 1245 million in 2023 and further to 918 million US dollars in 2024, indicating a reduction but remaining substantial compared to 2020 levels.

Overall insight

The tax-related figures exhibit considerable fluctuations, with periods of tax benefits transitioning into years of considerable tax expenses. The sharp negative provisions and negative cash operating taxes in 2021 suggest one-off tax credits or adjustments which were not sustained. The substantial increase in 2024's provision for income taxes corresponds with a more moderate cash tax payment relative to the peak in 2022. This pattern reflects a volatile tax environment or changing profitability and tax strategy within the company, which may warrant further investigation to understand the underlying causes.

The financial data over the five-year period reveals several notable trends in the company's financial structure, specifically concerning its debt, equity, and invested capital.

Total Reported Debt & Leases

This metric decreased significantly from 162,998 million USD in 2020 to 139,485 million USD in 2021, indicating a notable reduction in debt and lease obligations. However, from 2021 onward, the debt level began rising again, reaching 160,862 million USD in 2024. This upward trend suggests increased borrowing or lease commitments over the last three years after the initial reduction.

Equity Attributable to Ford Motor Company

Equity experienced strong growth from 30,690 million USD in 2020 to 48,519 million USD in 2021, reflecting an improvement in the company's net asset base. However, equity declined slightly in the subsequent years, dropping to 43,242 million USD in 2022 and further to 42,773 million USD in 2023, before a modest recovery to 44,835 million USD in 2024. This fluctuation could indicate variable profitability, retained earnings impact, or other equity adjustments during the period.

Invested Capital

The invested capital showed a downward movement from 170,559 million USD in 2020 to 160,105 million USD in 2021, followed by a steady increase in subsequent years to reach 186,730 million USD in 2024. This rising trend from 2021 onward suggests continued investment in the company's operations, assets, or growth initiatives that may contribute to future revenue generation.

Overall, the data depicts a company that initially reduced its debt and invested capital while increasing equity in 2021 but then transitioned into a phase of expanding debt and invested capital with relatively stable but fluctuating equity levels through 2024. The increase in invested capital alongside rising debt could imply strategic investments financed partly by debt. The equity trends warrant further investigation to understand the factors affecting net asset value changes.

Economic Profit Trends

The economic profit displays significant fluctuations over the analyzed period. It started at a substantially negative value of -11,510 million US dollars, improved notably to -2,163 million in the following year, before deteriorating again to -10,466 million. The downward trend continued slightly into the subsequent year with a value of -11,221 million and then showed some recovery to -6,383 million in the last reported period. This pattern indicates persistent challenges in generating positive economic value, though there are intermittent improvements.

Invested Capital Changes

The invested capital shows a steady upward trend throughout the timeframe. Beginning at 170,559 million US dollars, it slightly decreased to 160,105 million in the next year but then resumed a consistent increase, reaching 164,218 million, 173,985 million, and ultimately 186,730 million in the latest period. This growth suggests ongoing investment or asset acquisition activity, signaling expansion or reinforcement of the capital base.

Economic Spread Ratio Analysis

The economic spread ratio remains negative throughout the period, reflecting returns below the cost of capital. It initially registers at -6.75%, improves abruptly to -1.35% the following year, then worsens again to -6.37% and -6.45% in the succeeding years. The last period ends with an improved ratio of -3.42%. Despite some short-term improvements, the persistent negative values highlight challenges in achieving profitable capital utilization.

Overall Insights

The company exhibits a pattern of sizeable economic losses each year despite increasing invested capital. The economic spread's negative values indicate ongoing inefficiencies or unfavorable returns relative to capital costs. While there are periods of recovery, these are not sustained, and economic profit remains negative, hinting at structural or cyclical difficulties in achieving profitability from invested assets. The increase in invested capital coupled with continuous economic losses might suggest that asset growth is not yet translating into value creation.

The financial performance over the analyzed periods reveals fluctuating economic profitability accompanied by a consistent increase in adjusted company revenues excluding Ford Credit.

Adjusted Company Revenues Excluding Ford Credit

The revenues demonstrate a steady upward trajectory, rising from $116,379 million in 2020 to $173,381 million in 2024. This consistent growth suggests effective sales expansion or market penetration efforts over the five-year span.

Economic Profit

Despite the growth in revenues, economic profit remains negative throughout the period. It improved notably in 2021 to -$2,163 million from a lower base of -$11,510 million in 2020, indicating a short-term enhancement in profitability. However, subsequent years revert to higher negative values, peaking at -$11,221 million in 2023 before slightly recovering to -$6,383 million in 2024. The persistent negative economic profit could imply that the returns on capital employed did not cover the cost of capital over these years.

Economic Profit Margin

The economic profit margin mirrors the economic profit's trend, remaining negative throughout, which aligns with the negative absolute economic profit. It improved significantly from -9.89% in 2020 to -1.71% in 2021, signaling better operational efficiency or cost management in that year. However, it deteriorated again in 2022 and 2023, with margins of -7.01% and -6.75%, respectively, before improving to -3.68% in 2024. This pattern indicates intermittent challenges in generating returns above the cost of capital despite higher revenues.

Overall, while the company's revenues excluding Ford Credit have consistently increased, economic profitability reveals ongoing challenges. The intermittent improvements in economic profit and profit margin suggest periods of relative operational efficiency, but persistent negative profitability highlights the need for strategies addressing cost control or capital efficiency to enhance long-term shareholder value.