Ford (F) shares tumbled on Thursday after the company reported weaker-than-expected second-quarter profit on Wednesday and did not raise its full-year profit outlook like Big Three rival GM.
Ford reported quarterly sales of $47.8 billion, below the $43.37 billion consensus estimate (based on Bloomberg). Ford’s adjusted EPS was $0.47, below the $0.67 estimate, and adjusted EBIT was $2.8 billion, below the $3.73 billion estimate.
Ford shares were down more than 17% on Thursday afternoon.
In terms of guidance, Ford maintained its full-year adjusted EBIT target at the current range of $10 billion to $12 billion, but raised its adjusted free cash flow forecast by $1 billion to $7.5 billion to $8.5 billion.
“We don’t expect the second half to be materially different from the first half or to be down,” Ford Chief Financial Officer John Lawler said on a conference call with reporters. Lawler said rising warranty costs were eating into Ford Pro profits. “It’s part of our outlook and we plan to manage it.”
Ford’s shares fell as the major automakers’ results have been disappointing so far this quarter. General Motors (GM) shares fell after it again delayed the start-up date of its electric vehicle factory despite better-than-expected earnings guidance, leading analysts to worry the company may have peaked in earnings. Stellantis (STLA) shares also fell more than 7% after its own disappointing results.
As part of its Ford+ plan, Ford has split its business into three divisions: Ford Blue, its traditional gasoline vehicle business; Ford Model e, its EV division; and Ford Pro, its commercial vehicle and super duty truck business. Here’s Ford’s second quarter breakdown:
Ford Blue: $26.7 billion, EBIT $1.171 billion
Model e: Revenues $1.1 billion, EBIT loss $1.143 billion
Ford Pro: Revenues $17 billion, EBIT $2.564 billion
“Ford+ is progressing well, our fundamental quality is improving and FordPro is showing strong growth across all of our businesses,” Ford CEO Jim Farley said in the earnings call. “The transparency and accountability that comes with having separate teams focused on different customer needs leads to better decisions and greater value for everyone.”
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Ford Pro is the company’s highlight, with its commercial vehicle division’s profits outpacing its traditional gasoline business, Ford Blue. Meanwhile, Ford’s Model e EV division lost another $1.143 billion in EBIT and is expected to lose $5.5 billion in 2024.
That’s not to say Ford’s EVs aren’t selling. Ford’s first-quarter U.S. deliveries were relatively flat for the quarter, up 0.8% from a year ago to 536,050 vehicles, but EV sales rose 61.4% in the quarter, buoyed by sales of the Mustang Mach-E, Ford Lightning pickup and E-Transit electric van. Hybrid sales also jumped 55.6% in the second quarter.
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Ford also saw a recovery in truck sales, with segment sales up 4.5% to 308,920 units in the second quarter. The Ford Ranger, Maverick and Expedition led the performance, but sales of F-Series pickups fell 6% as the launch of Ford’s new F-150 was delayed until earlier in the year.
A driver test drives the electric 2024 Ford Mustang Mach-E on the test track at the Electrify Expo at The Yards north of Denver, Sunday, July 14, 2024. (Photo by Associated Press/David Zarbowski) (The Associated Press)
The F-Series and commercial Super Duty trucks that drive Ford Pro’s performance are crucial to Ford’s profits this year and in the future. In fact, Ford announced last week that it will convert its Oakville assembly plant, which is used for EV trucks, to Super Duty trucks by 2026 and increase Super Duty production to meet demand for large Super Duty trucks.
The EV backlash in Oakville comes after Ford pushed back EV production at its massive Blue Oval City EV campus in Tennessee to 2026 from its original 2025 start date.
Pras Subramanian is a Yahoo Finance reporter covering the auto industry. twitter And on Instagram too.
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