Ford and Lincoln vehicles are displayed for sale at a Ford dealership on August 21, 2024 in Glendale, California.
Mario Tama | fake images
DETROIT— Ford engine guided to the lower end of its previously announced 2024 earnings forecast as it slightly beat Wall Street's expectations for the third quarter.
The Detroit automaker said Monday that it now expects adjusted earnings before interest and taxes, or EBIT, of about $10 billion. It had previously forecast between $10 billion and $12 billion. It maintained its adjusted free cash flow forecast of between $7.5 billion and $8.5 billion.
Ahead of Monday's results, several Wall Street analysts feared Ford would have to lower its forecast due to weakening demand, rising vehicle inventory levels and concerns about Ford's ability to achieve its announced production cuts. costs of 2 billion dollars this year.
“Our focus continues on cost and quality, which are slowing our progress and represent tremendous growth potential,” Ford Chief Financial Officer and Vice President John Lawler said during a news conference Monday.
Lawler said Ford has reached its $2 billion in materials, freight and manufacturing costs, but higher inflation and warranty costs have affected those improvements and prevented the company from “having a record year.”
Here's how the company performed in the third quarter, compared to average estimates compiled by LSEG:
- Earnings per share: 49 cents adjusted versus 47 cents expected
- Automotive income: $43.07 billion vs. $41.88 billion expected
The automaker's shares fell about 5% in after-hours trading after closing Monday 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 profit expectations.
Lawler said the company's warranty costs in the third quarter were slightly lower than a year earlier after increasing by $800 million year over year during the second quarter.
“It's an improvement, but it's not as big as we'd like to see,” Lawler said, declining to disclose overall costs during the period.
Ford's third-quarter results were led by its “Pro” commercial and fleet business, as well as its traditional operations, known as “Ford Blue.” Blue reported adjusted earnings of $1.63 billion, while Pro earned $1.81 billion.
Lawler said Ford Pro and Blue operations are being 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 third-quarter loss of $1.22 billion, less than it lost a year earlier, largely due to lower volumes and cost cuts.
Ford CEO Jim Farley told investors Monday that the company continues to believe in its electric vehicle strategy; However, the automaker has withdrawn many vehicle investments to focus on hybrid models.
Ford's net income for the third quarter was $896 million, or 22 cents per share. Adjusted EBIT increased approximately 16% year over year to $2.55 billion. Ford's third quarter of 2023 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 overall revenue for the third quarter, including its financial business, rose about 5% 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 traditional automakers have increasingly struggled, have contributed more than $600 million to the company's EBIT. That includes Ford's plans to increase the country's vehicle exports.
Farley also addressed the company's rising new vehicle inventory levels. Ford has a 91-day supply of gross inventory, including vehicles in company possession, and a 68-day supply on dealer lots at the end of the third quarter, which has investors concerned.
He said the mix and price of those vehicles is “really good” and that the company is holding back some inventory to help with vehicle changes in early 2025.
