Ford sends a truckload of cash back to shareholders, shares rise By Reuters

By Joseph White and Nathan Gomes

DETROIT (Reuters) -Ford Motor said on Tuesday it will return more cash to shareholders, starting with an extra 18 cents-per-share dividend in the first quarter, joining General Motors (NYSE:) in giving investors more of the cash spinning from North American combustion trucks.

Ford (NYSE:) shares were up 6.5% in after-hours trading after gaining 4.1% during the regular session.

The automaker forecast $10 billion to $12 billion in pretax profit for 2024, after earning $10.4 billion before taxes last year. Profit from Ford’s Pro commercial vehicle business and Ford Blue combustion vehicle units offset steep losses from Model E electric vehicle operations.

Ford’s North American truck and SUV business – both commercial and consumer – will contribute to projected free cash flow of $6 billion to $7 billion this year. Ford has committed to return to investors 40% to 50% of free cash flow.

“Whenever that (regular) dividend doesn’t reach 40-50% we will provide a supplemental dividend,” Chief Financial Officer John Lawler told reporters on a conference call on Tuesday.

“Consistency is going to be very important,” he said.

Ford’s electric vehicle operations will continue to be a cash drain.

Model E lost an average of more than $47,000 per vehicle in the fourth quarter, Ford reported. The company projected a wider pretax loss of between $5 billion and $5.5 billion this year.

Ford’s next generation of EVs “will be profitable and return their cost of capital,” Lawler said.

“The EV business needs to stand on its own, it needs to be profitable and provide a return” above its cost of capital independent from emissions compliance benefits, he said.

Every electric F-150 Lightning Ford sells allows it to sell 12 combustion pickup trucks and stay in compliance with U.S. emissions rules, Lawler said.

Ford Pro, the automaker’s commercial business, will be a key driver of profit and potential cash returns to investors this year. Ford Pro is forecast to earn $8 billion to $9 billion this year, up from $7.2 billion in pretax profit last year. Ford’s rival, GM, last week delivered an optimistic outlook for 2024, and Chief Executive Mary Barra signaled shareholders will get more of the cash spinning from sales of GM’s combustion trucks and SUVs through share buybacks. Cost cuts and demand for crossover SUVs and pickup trucks helped automakers offset inflationary headwinds and early signs of EV demand cooling. Consumers opted for hybrid vehicles and family SUVs instead of EVs for convenience and relative ease in terms of maintenance. In response, Ford and GM, which were putting together ambitious EV plans, have begun leaning toward their higher-margin hybrid and gas-powered models.