Racecar-loving Ford CEO Jim Farley is in the midst of what may be the biggest challenge of his professional life.
Ford (F), which is celebrating its 120th anniversary this year, is pushing hard into what could be its path forward for the next century. Farley’s focus on EVs and transitioning the business is tantamount to the automaker’s future, and he has put his money where his mouth is from an organizational standpoint.
The iconic automaker will begin reporting its results as three separate organizations — Ford Blue (for its traditional gas powered business), Ford Commercial (for commercial trucks and clients), and Ford Model E (for its EV business) — with their Q1 2023 earnings, expected May 2.
There will be no place to hide loss-producing units like EVs after this transition.
“We do think they’re following the right strategy by taking a more balanced approach towards EV growth and really focusing on building excitement surrounding individual EV models, as opposed to setting a date in the future in which they’re going to be all-electric,” CFRA analyst Garrett Nelson told Yahoo Finance. “We think the balanced approach is the right one, just given the fact that EVs still accounted for less than 6% of all US new vehicle sales last year.”
The performance of the EV business is the one investors and Wall Street analysts are most keenly focused on for Q1. When the announcement was made about the re-org back in March last year, Wall Street rewarded the company’s stock with a bullish bump in price. The initial read: better accountability, a tighter grip on costs and more electrified profits.
But for Ford investors, that excitement seems like eons ago.
After the good news of the F-150 Lightning going on sale back in April 2022, Ford has faced a series of setbacks. Ford reported disappointing third quarter earnings after the company decided to shut down its Argo AI autonomous tech joint-venture due to issues with developing the technology and funding. Ford took a $2.7 billion impairment from the move and said its third quarter earnings were impacted by $1 billion in higher costs.
Ford’s fourth quarter earnings report wasn’t much better, with the company missing its full-year EBIT (earnings before interest and taxes) forecast by over $1 billion.
“We should have done much better last year,” Ford CEO Jim Farley said. “We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.”
This came after crosstown rival GM reported a monster quarter and full-year profit guidance well above consensus estimates. Many on the street saw this as evidence of GM’s operational prowess as it gears up for its EV transition.
“With this exceptional performance and guide from GM, we believe this was a strong statement to the Street expressing that demand worries and supply shortages are a thing of the past and to focus on the massive opportunity ahead as GM continues chipping away at its transformational story,” Wedbush analyst Dan Ives wrote in a note to investors following GM’s report.
The Ford F-150 Lightning displayed at the Philadelphia Auto Show, Jan. 27, 2023, in Philadelphia. (AP Photo/Matt Rourke, File)
Production hiccups
Ford’s recent issues that are most concerning to investors revolve around production and reliability.
Ford is still struggling with reliability and recall costs, with the brand having the most cars subject to recall since the start of 2022 (totaling over 9 million vehicles). Farley himself has called out the high cost of recalls affecting the brand’s financial performance.
And then came production issues with its most important product release to date: the F-150 Lightning. A battery issue resulted in a fire in an F-150 that was awaiting final inspection, and the fire spread to two other vehicles. Ford halted production in early February with battery supplier SK On and won’t restart production until March 13.
“In the weeks ahead, we will continue to apply our learnings and work with SK On’s team to ensure we continue delivering high-quality battery packs – down to the battery cells,” a Ford spokesperson told Yahoo Finance in a statement.
The question for investors and analysts is whether Ford’s production and reliability issues are going to plague its F-150 Lightning rollout, which is still in its nascent stage and figures to be a huge growth driver for its EV unit in the years to come.
Ford Motor Company’s electric F-150 Lightning on the production line at their Rouge Electric Vehicle Center in Dearborn, Michigan on September 8, 2022. (Photo by JEFF KOWALSKY / AFP)
“In the case of the Lightning, it appears to be one incident that was caught before getting to the customer, and the company is being appropriately cautious with the response,” Guidehouse Insights analyst Mike Austin told Yahoo Finance. “The bigger problem is that it’s a reminder of Ford’s continued trouble with product launches — but I think that the EV-specific issues are short-term and not a strategic error.”
CFRA analyst Garrett Nelson echoed that view, noting that Ford isn’t the only one struggling with EV reliability.
“We think it’s more of a short-term thing,” Nelson says, noting that Ford’s not the only one that’s had battery issues. “You look at some of the smaller EV manufacturers like Lucid and Rivian, their production ramp-ups have been very disappointing.” And General Motors’ Chevy Bolt battery, he added, required a costly recall and remediation.
The hope for Ford is it solves the issue with its battery partner SK On and moves forward. Ford has around 200,000 pre-orders for the Lightning, and the last thing it wants to do is have customers cancel orders because of reliability fears.
Ford CEO Jim Farley speaks during the official launch of the all-new Ford F-150 Lightning electric pickup truck at the Ford Rouge Electric Vehicle Center in Dearborn, Michigan, U.S. April 26, 2022. REUTERS/Rebecca Cook
‘A lot of investors are thinking they would be further along’
The emergence of car-guy CEO Jim Farley in October 2020 was a breath of fresh air for Ford faithful following the tenure of its last CEO, Jim Hackett, who had no automotive experience to speak of (he worked at a furniture company), and it showed during Hackett’s brief, yet rocky tenure.
Farley has spent years at the company in various roles, most recently as COO, and prior to that roles including running Ford’s EMEA (Europe, Middle East, Africa) business and serving as chief of marketing and sales at Lincoln. Prior to joining Ford in 2007, Farley was VP and GM of Toyota’s Lexus luxury division and ran all of Toyota’s marketing and advertising activities in the U.S.
And Bill Ford, the executive chairman of Ford (and the great grandson of Henry Ford), is still a believer in his CEO, despite recent hiccups.
“It’s been episodic for a lot of my career,” Ford said last month at the announcement of a new $3.5 billion battery plant in Michigan. “We get it right, we slide back, we get it right. I think we probably had so much focus on the future that we perhaps took the eye off the ball a little bit on the present. But Jim’s got a full-court press on it, and we are already starting to see results.”
Guidehouse’s Austin said that “Farley has a good perspective on the big picture, especially with his global experience within Ford, and he seems to understand the urgency of transforming the company.”
Ford Motor Company Chief Executive Bill Ford announces Ford will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan U.S., February 13, 2023. REUTERS/Rebecca Cook
Nevertheless, some investors are growing impatient: After shooting from around $5 a share when Farley became CEO to around $25 a share in early January of 2022, shares have stumbled and sit around $13.
“Be patient with Ford,” Farley said in an interview with Yahoo Finance in early February. “We are under double transformation. Some things are going really fast, like we’re now number two in EVs, the Lightning is sold out for like another year. I kind of didn’t think that would happen this fast. On the other hand, the industrial system purchasing supply chain or manufacturing or engineering, we just have to get a lot of costs out. It funds the whole future of the business.”
To placate investors, the company declared a supplemental dividend in addition to its regular dividend.
Barclay’s Dan Levy, who in initiated coverage of Ford in mid-February with an Equal Weight rating and $13 price target, believes Ford is facing more difficulties with its transformation than some competitors.
“Ford is facing recessionary pressures that stand to challenge its recently robust pricing power alongside its own cost challenges, and also facing what we expect to be challenging near-term margins during the ramp of its of its EV transition,” Levy wrote in a recent note to clients. “Accordingly, we don’t see a compelling reason to own the stock today, but would rather wait for better opportunities ahead.”
CFRA’s Nelson, who has a Buy rating on Ford with a $15 price target, explained that “a lot of investors didn’t have an appreciation for how difficult — what a massive global footprint that Ford has. And so I think after 2 and 1/2 years, a lot of investors are thinking they would be further along. So really, there’s a lot of pressure on Farley, and he’s going to really have to show some execution here in the coming quarters.”
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
After a long day at a work event in July, Kathryn Kozody was relieved when she spotted a car with a lit-up taxi sign.
She thought it was odd when the driver told her she’d have to pay her fare with a debit card. Still, a tired Kozody hopped in the car.
“I was like, ‘Fine, it’s kind of weird, but let’s go home,'” said Kozody, who lives in Calgary.
Nothing else seemed off — until the next day when she discovered that almost $2,000 was missing from her bank account. On top of that, her debit card had someone else’s name on it.
Kozody concluded that the taxi driver was a fraudster who, during the debit card transaction, recorded her PIN, stole her card and handed her back a fake.
“I started freaking out,” she said. “It’s terrifying when they have your debit card.”
It took Kozody about two weeks to get her money back from her bank, and she’s still rattled by the experience.
The day after taking what she thought was a ride in a taxi, Kathryn Kozody of Calgary found out someone had withdrawn almost $2,000 from her bank account. (James Young/CBC News)
“It really felt like an invasion of privacy and a violation to be a victim of this scam,” she said. “I really don’t want it to happen to anybody else.”
The taxi scam isn’t new; Toronto and Montreal have been seeing it for years. But the crime is becoming more widespread.
This summer, police in Calgary,Edmonton and at least five cities in southern Ontario, including Kingston and Ottawa, posted warnings online that they had received multiple reports of the scam.
Police and the Canadian Taxi Association say the fraudsters have a helping hand: with the click of a button, they can purchase a generic — but official looking — taxi roof sign on e-commerce sites like Amazon.
Edmonton Police posted this alert on Facebook in July, warning people about an ongoing taxi scam. The city’s police department says that it received about 10 reports of the scam that month. (Edmonton Police/Facebook )
“They do have a moral responsibility to at least sell the signs to individuals that are properly licensed,” said association president Marc André Way.
However, the U.S.-based company continues to sell the product to all customers.
“These lights are legal to sell in Canada,” Amazon told CBC News in an email.
‘Eye-popping’ numbers
The taxi scam has several variations but typically ends the same way: the victim pays with a debit card, then the scammer secretly steals it and hands the victim a similar but fake card. Shortly thereafter, money disappears from the victim’s account.
Ron Hansen, deputy chief of police in Sarnia, Ont., said his department received 12 reports of the scam in July, with one victim losing $9,900.
Toronto police report that since June 2023 the department has received 919 reports of the taxi scam, totalling $1.7 million in losses.
Jessica Chin King of Toronto said after a recent cab ride, she got a suspicious activity alert from her bank. She learned $600 had been withdrawn from her account. (Craig Chivers/CBC)
The numbers are “eye-popping,” said Toronto police detective David Coffey.
“When they do get a victim, they are quick to go right into the bank accounts. They’re quick to empty them out.”
Jessica Chin King of Toronto said just 15 minutes after a recent cab ride, she got a suspicious activity alert from her bank. Turns out, $600 had been withdrawn from her account.
“I was like, ‘Wow, I can’t believe that just happened.’ I was in shock,” said Chin King, whose bank later reimbursed the cash.
She said she too was fooled by the taxi sign atop the car.
“I was in the car with somebody who wasn’t a taxi driver. Anything could have happened,” she said. “I was thankful that it was only my bank [account] that was compromised.”
Taxi light for $35 on Amazon
CBC News bought a taxi sign from Amazon for $35. It has a magnetic strip on the bottom, so it easily sticks to the top of a car.
To power the light, an attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, also known as the cigarette lighter outlet.
The taxi association says licensed taxi drivers typically get their roof signs from speciality suppliers, and they are hardwired to the car — not powered via the cigarette lighter.
“When you see that … it’s obvious that it’s not a legitimate taxi,” said Way, the association president.
“This is not a safe, practical way to distribute the trusted ‘Taxi’ signs,” he wrote.
CBC News ordered this $35 taxi sign on Amazon. The attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, while the lights for licensed drivers are hardwired into the vehicle. (Sophia Harris/CBC News)
But Amazon told Way — and CBC News — the signs will remain on its site, because the company isn’t breaking any rules.
“It’s going to be quite difficult, I think, for anyone to stop Amazon from selling a product that is perfectly legal to sell,” said Toronto criminal lawyer, Daniel Goldbloom. “It’s true that these taxi signs can be used to commit scams, but kitchen knives can be used to commit murder — and we don’t stop retailers from selling those.”
But Way isn’t giving up hope.
He says the taxi association also plans to ask other online retailers, such as Temu and eBay, to stop selling the taxi signs and will lobby provincial governments for legislation that regulates the sale of the product.
However, Coffey said he believes the best way to fight the taxi scam is to educate people about it.
“Never, never give another person control of your debit card,” the detective said.
Victims Chin King and Kozody also want to spread the word.
“The more people know, the less likely it is to happen again to somebody else,” Kozody said.
