DETROIT – Ford engine The company was on the low end of its previously announced 2024 profit guidance because it barely beat Wall Street's expectations for the third quarter.
The Detroit automaker said Monday that it now expects adjusted earnings before interest and taxes (EBIT) of about $10 billion. Previously it was assumed that it will be between 10 and 12 billion US dollars. The company maintained its guidance for adjusted free money flow between $7.5 billion and $8.5 billion.
Heading into Monday's results, several Wall Street analysts were concerned that Ford would lower its forecast on account of slowing demand, rising vehicle inventories and concerns about Ford's ability to satisfy its announced $2 billion in cost cuts this 12 months 12 months would should be reduced.
“Our focus remains on cost and quality, which are slowing our progress and represent tremendous upside potential,” John Lawler, Ford's chief financial officer and vice chairman, said during a media briefing on Monday.
Lawler said Ford met its $2 billion in materials, freight and manufacturing costs, but higher inflation and warranty costs worn out those improvements and “held the company back from a record year.”
Here's how the corporate performed within the third quarter in comparison with LSEG's average estimates:
- Earnings per share: 49 cents adjusted versus 47 cents expected
- Automobile sales: $43.07 billion versus expected $41.88 billion
Shares of the automaker fell about 5% in after-hours trading after closing at $11.37 on Monday, up 2.7%.
The automaker was under pressure after a disappointing second quarter through which unexpected warranty costs caused the corporate to miss Wall Street's earnings expectations.
Lawler said the corporate's third-quarter warranty costs were barely lower year-over-year after increasing $800 million year-over-year within the second quarter.
“It's an improvement, but it's not as big as we'd like to see,” Lawler said, declining to reveal total costs throughout the period.
Ford's third-quarter results were led by its “Pro” industrial vehicle and fleet businesses, in addition to its traditional division, referred to as “Ford Blue.” Blue reported adjusted profit of $1.63 billion, while Pro earned $1.81 billion.
Lawler said Ford Pro and Blue operations have been affected – and can likely proceed to be affected – by some supplier issues, partially on account of Hurricane Helene in late September.
Ford's Model e electric vehicle division posted losses of $1.22 billion within the third quarter, lower than a 12 months earlier, largely on account of lower volumes and value cuts.
Ford CEO Jim Farley told investors on Monday that the corporate continues to consider in its EV strategy; However, the automaker has in the reduction of on many vehicle investments to concentrate on hybrid models.
Ford's third-quarter net income was $896 million, or 22 cents per share. Adjusted EBIT increased about 16% year-over-year to $2.55 billion. Ford's third quarter of 2023 included automotive sales of $41.18 billion, 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 revenue, including its financial business, rose about 5% year-over-year to $46.2 billion within the third quarter. It was the corporate's tenth consecutive quarter of year-over-year revenue growth.
Farley noted that the corporate's operations in China, where legacy automakers have increasingly struggled, contributed greater than $600 million to the corporate's EBIT. This also includes Ford's plans to extend vehicle exports from the country.
Farley also discussed the corporate's increasing inventory of recent vehicles. Ford had 91 days of gross inventory, including company-owned vehicles, and 68 days on dealer lots at the tip of the third quarter, worrying investors.
He said the combination and price of those vehicles is “really good” and that the corporate is holding back some inventory to support the vehicle transition in early 2025.
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