Ford (F) stock is plummeting on Thursday after the automaker reported disappointing second-quarter profits on Wednesday and did not revise its full-year profit guidance upward, unlike its Big Three counterpart, General Motors (GM).
For the quarter, Ford reported revenues of $47.8 billion, slightly exceeding the Bloomberg consensus estimate of $43.37 billion and representing a 2.9% increase from the same period last year. However, the company posted adjusted earnings per share (EPS) of $0.47, falling short of the expected $0.67. Additionally, Ford’s adjusted earnings before interest and taxes (EBIT) came in at $2.8 billion, missing the forecasted $3.73 billion.
In terms of guidance, Ford maintained its current full-year adjusted EBIT forecast of $10 billion to $12 billion. However, the company did raise its adjusted free cash flow projection by $1 billion, bringing the new range to $7.5 billion to $8.5 billion. “We don’t anticipate much change in the second half compared to the first half,” said Ford CFO John Lawler during a call with reporters. Lawler noted that higher warranty costs were offsetting gains in the Ford Pro division, adding, “This was part of our guidance, and we plan to manage it.” Following the earnings report, Ford shares dropped over 16% in early trading on Thursday.
As part of its Ford+ strategy, the company has divided its operations into three distinct units: Ford Blue, which focuses on traditional gas-powered vehicles; Ford Model e, dedicated to electric vehicles (EVs); and Ford Pro, which caters to commercial and super-duty trucks. Here’s a breakdown of Ford’s Q2 performance across these units:
- Ford Blue: $26.7 billion in revenue, $1.171 billion in EBIT.
- Ford Model e: $1.1 billion in revenue, with a ($1.143 billion) EBIT loss.
- Ford Pro: $17 billion in revenue, $2.564 billion in EBIT.
“Ford+ is progressing as planned, with improvements in our underlying quality and significant upside potential in our Ford Pro division,” said Ford CEO Jim Farley in the earnings release. “The transparency and accountability gained from having separate teams focused on different customer needs are leading to better decision-making and greater value for all stakeholders.”
Ford Pro has emerged as a bright spot for the company, with its commercial unit’s profits surpassing those of the Ford Blue division. However, the Ford Model e EV unit remains a challenge, posting a $1.143 billion EBIT loss and projected to lose $5.5 billion in 2024.
This loss doesn’t mean Ford’s EVs aren’t selling. In Q1, Ford’s U.S. deliveries were relatively stable, up 0.8% year-over-year to 536,050 vehicles. Notably, EV sales surged by 61.4%, driven by the Mustang Mach-E, Ford Lightning pickup, and E-Transit EV van. Hybrid sales also jumped by 55.6% in Q2.
Ford also saw a rebound in its truck sales, with the segment growing by 4.5% to 308,920 units in Q2. The Ford Ranger, Maverick, and Expedition were key contributors, although F-Series pickup sales declined by 6%, partly due to delays in rolling out the all-new F-150 earlier this year.
The F-Series and commercial Super Duty trucks are critical for Ford’s profitability this year and beyond. Last week, Ford announced plans to increase Super Duty production by converting its Oakville assembly plant, initially intended for EV trucks, to focus on Super Duty trucks by 2026 to meet growing demand.
This shift in EV production at Oakville coincides with Ford’s decision to delay the start of EV production at its BlueOval City EV campus in Tennessee to 2026, postponing the original 2025 timeline.
