Ford Lowers 2024 Earnings Outlook Despite Beating Q3 Expectations

LOCAL MARKET COMMENTARY

South Africa’s Top 40 and All Share indices closed higher on Monday, ending the day up by 0.60% and 0.72% at 79,401 and 87,644 points, respectively, as investors anticipated Finance Minister Enoch Godongwana’s upcoming mid-term budget statement for updates on public finances. Key economic data this week include September’s credit extension and money supply figures today, producer inflation and trade balance data on Thursday, and October’s vehicle sales on Friday. Meanwhile, retailer Pick n Pay is moving forward with the Johannesburg IPO of its discount grocery chain, Boxer, aiming for the high end of its previously guided range of 6 to 8 billion rand ($339–$452 million). The offering includes an overallotment option up to 500 million rand, to be covered by issuing new shares.

EUROPEAN MARKET COMMENTARY

European markets closed higher on Monday, advancing in the afternoon as investors monitored the Middle East geopolitical situation. With inflation showing signs of improvement and economic challenges prompting a recent interest-rate cut by the European Central Bank, investors are now focused on upcoming third-quarter GDP and October inflation data, which are expected to provide further insights into the region’s economic outlook.

US MARKET COMMENTARY

Wall Street closed higher on Monday as investors prepared for a busy week of earnings reports from major companies and closely watched the final days before the Nov. 5 presidential election. Market sentiment improved as energy supplies remained stable despite weekend tensions in the Middle East. With around 169 S&P 500 companies reporting this week, investors will also pay close attention to key economic data, especially Thursday’s Personal Consumption Expenditure Price Index, the Federal Reserve's preferred inflation measure. Markets are broadly factoring in a potential second Trump administration, though the election remains tight.

ASIA MARKET COMMENTARY

Asia-Pacific markets traded mixed this morning, with Japan’s Nikkei 225 extending gains from the previous day. This rise comes despite Japan's ruling Liberal Democratic Party losing its parliamentary majority in Sunday’s lower house election—the first such loss since 2009. Japan’s September jobless rate dropped to 2.4% from 2.5% in August, beating Reuters’ forecast of 2.5%. Traders in the region are also watching for Singapore’s upcoming unemployment data.

CURRENCY MARKET COMMENTARY

South Africa's rand weakened slightly on Monday as investors awaited the mid-term budget review set for Wednesday, the first to be presented under the new coalition government established in June. The dollar eased slightly but stayed close to its recent high as markets awaited major U.S. data releases later in the week, which could provide insights into the Federal Reserve’s future policy direction.

COMMODITY MARKET COMMENTARY

Gold prices remained close to record highs this morning, driven by uncertainty around the upcoming U.S. presidential election and anticipation of economic data that may signal the Federal Reserve’s next move on interest rates. Oil prices inched up after a steep drop on Monday, as news of a U.S. plan to replenish the Strategic Petroleum Reserve offered some support, while investors continued to monitor Middle East developments.

Pick n Pay Stores Limited (PIK) -0.11%

In the first half of FY25, the company’s turnover grew by 3.7% to R56.1 billion, though its gross profit margin slightly decreased from 18.5% to 17.9%. Trading expenses rose marginally by 1.8%, reaching R11.4 billion, while trading profit saw a significant 159.4% increase, totalling R82.5 million. However, the company reported a higher loss before tax and capital items at R1 052.4 million, a 19.6% increase from the previous year. The period ended with a 44.8% increase in net loss, totalling R827.4 million, translating to a basic loss per share of 140.83 cents. Headline earnings per share (HEPS) fell by 16.3%, with comparable HEPS decreasing by 24.3%.

PPC Limited (PPC) +2.10%

For the current period, the company anticipates earnings per share (EPS) for continuing operations to be between 20.0 and 23.5 cents, reflecting an increase of 11% to 31% from the prior period's 18 cents. Headline earnings per share (HEPS) is expected to range from 20.0 to 23.5 cents, marking an improvement of 0% to 18% over the previous 20 cents. The rise in EPS is largely due to lower administrative and operating expenses in the South African and Botswana operations, increased investment income from higher cash balances, and the absence of a R53 million impairment seen in the previous period. However, these gains are partly offset by a higher tax rate of 33%, up from 25% last year.

Balwin Properties Limited (BWN) +3.81%

The company reported a 28% drop in revenue to R852.7 million and a 57% decline in profit, ending at R76.9 million. Earnings per share (EPS) and headline earnings per share (HEPS) both fell by 57%, to 16.34 and 16.26 cents, respectively. Despite these declines, net asset value per share rose by 3% to 875.05 cents. The board has decided not to declare a dividend for the period, prioritizing debt reduction. A dividend declaration may be reconsidered after the full-year results are reviewed.

Ford Motor Company (F) +2.71%

Ford Motor reported third-quarter results that slightly exceeded Wall Street expectations, with adjusted earnings per share of 49 cents (above the expected 47 cents) and automotive revenue of $43.07 billion (versus the forecasted $41.88 billion). Despite this, Ford revised its 2024 earnings guidance to the lower end of its previous $10-12 billion EBIT forecast, now expecting around $10 billion, while maintaining its cash flow forecast at $7.5-8.5 billion. Third-quarter net income was $896 million (22 cents per share), down from $1.17 billion (30 cents per share) last year. Ford’s total revenue rose 5% year over year to $46.2 billion, marking its 10th consecutive quarter of revenue growth. Following the report, Ford's shares fell roughly 5% in after-hours trading, despite closing up 2.7% on Monday.

Sinopec Oilfield Service Corporation Class A (600871) +3.45%

Chinese refiner Sinopec reported a 52.1% drop in third-quarter net profit to 8.54 billion yuan ($1.2 billion), impacted by lower oil prices and weak refining margins. Third-quarter revenue decreased 9.8% year-on-year to 790.4 billion yuan. From January to September, crude oil processing fell 1.6% to 5.08 million barrels per day, with refined fuel output down 0.8% to 116.6 million tons. Diesel production dropped 10.7%, while gasoline and jet fuel output rose by 4.1% and 10.5%, respectively. Refined fuel sales increased slightly, though domestic sales dropped 3.2%. Sinopec’s crude oil production grew by 0.3%, and natural gas output rose 5.6%. Capital expenditures for the first nine months decreased to 86.35 billion yuan, while the chemicals segment recorded a net loss of 4.9 billion yuan.

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