Ford and Lincoln vehicles are on display for sale at a Ford dealership on August 21, 2024 in Glendale, California.
Mario Tama | Getty Images
DETROIT — Ford Motor was driven to the low end of its previously announced 2024 profit forecast as it slightly beat Wall Street expectations for the third quarter.
The Detroit automaker said Monday it now expects adjusted earnings before interest and taxes, or EBIT, of about $10 billion. It had previously driven between $10 billion and $12 billion. It maintained its forecast for adjusted free cash flow between $7.5 billion and $8.5 billion.
Heading into Monday’s results, several Wall Street analysts were concerned that Ford would need to cut its forecast due to lower demand, rising vehicle inventories and concerns about Ford’s ability to achieve $2 billion in announced cost cuts this year. .
“Our focus continues to be on cost and quality, which are holding back our progress and represent tremendous upside,” Ford chief financial officer and vice president John Lawler said Monday during a media briefing.
Lawler said Ford achieved $2 billion in material, freight and manufacturing costs, but higher inflation and warranty costs have eroded those improvements and limited the company “from having a record year.”
Here’s how the company performed in the third quarter, compared to the average estimates compiled by LSEG:
- Earnings per share: 49 cents adjusted vs. 47 cents expected
- Income from cars: $43.07 billion versus $41.88 billion expected
Shares of the automaker fell about 5% in trading after Monday’s close at $11.37, up 2.7%.
The automaker was under pressure after a disappointing second quarter in which unexpected warranty costs caused the company to miss Wall Street’s earnings expectations.
Lawler said the company’s warranty costs in the third quarter were slightly lower than they were a year earlier, after rising $800 million year over year in the second quarter.
“It’s an improvement, but it’s not as big as we’d like to see,” Lawler said, declining to disclose total costs during the period.
Ford’s third-quarter results included its commercial business and its “Pro” fleet, as well as its traditional business, known as “Ford Blue.” Blue reported adjusted earnings of $1.63 billion, while Pro earned $1.81 billion.
Lawler said the Ford Pro and Blue operations have been affected — and will likely continue to be affected — by some supplier issues, in part due to Hurricane Helene in late September.
Ford’s “Model e” electric vehicle unit posted a loss of $1.22 billion in the third quarter — less than it lost a year earlier, largely due to lower volumes and cost cuts.
Ford CEO Jim Farley told investors on Monday that the company continues to believe in its EV strategy. However, the automaker has pulled back many investments in vehicles to focus on hybrid models.
Ford’s net income for the third quarter was $896 million, or 22 cents per share. Adjusted EBIT increased roughly 16% year-over-year to $2.55 billion. Ford’s 2023 third quarter included $41.18 billion in automotive revenue, net income of $1.17 billion, or 30 cents per share, and adjusted earnings before interest and taxes of $2.2 billion, or 39 cents per share.
Ford’s total third-quarter revenue, including its finance business, rose about 5 percent year over year to $46.2 billion. It marked the company’s 10th consecutive quarter of year-over-year revenue growth.
Farley noted that the company’s operations in China, where legacy automakers are increasingly struggling, have contributed more than $600 million to the company’s EBIT. This includes Ford’s plans to increase vehicle exports from the country.
Farley also referred to the company’s growing inventory levels of new vehicles. Ford has 91 days of gross inventory, including company-owned vehicles, and 68 days of dealer lots at the end of the third quarter, which has worried investors.
He said the mix and price of those vehicles is “really good” and the company is holding back some inventory to help with the vehicle turnover in early 2025.