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Ford shares fall after earnings miss expectations; drags auto sector down
Ford (F) shares plunged Thursday after the automaker missed second-quarter earnings on Wednesday and failed to raise its full-year profit forecast like its Big Three rival GM.
For the quarter, Ford reported revenue of $47.8 billion versus the $43.37 billion estimate (Bloomberg consensus). Ford’s adjusted EPS of $0.47 missed the $0.67 estimate, and adjusted EBIT of $2.8 billion versus the $3.73 billion expected.
Ford shares fell more than 17% in afternoon trading Thursday.
In terms of guidance, Ford maintained its current full-year adjusted EBIT range of $10 billion to $12 billion, but the company raised its adjusted free cash flow forecast by $1 billion to between $7.5 billion and $8.5 billion.
“We don’t see the second half being significantly different from the first half, or going down,” Ford CFO John Lawler said on a call with reporters. Lawler said higher warranty costs were eroding gains made in Ford Pro. “That was part of our guidance, and we’re planning to manage that.”
Ford’s decline came as part of disappointing performances from major automakers so far this quarter. General Motors (GM), despite a earnings exceed expectations and drive guidancesaw its shares fall as the company once again delayed the start date of an EV factory, with analysts also concerned that the company’s peak earnings were behind it. Stellantis (STLA) the stock was fell more than 7% after its own disappointing results.
As part of its Ford+ plan, Ford has split its business into three units: Ford Blue for its traditional gas-powered business, Ford Model and EV division, and Ford Pro for its commercial and superduty truck business. Ford’s Q2 breakdown is as follows:
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Ford Blue: $26.7 billion, $1.171 billion in EBIT
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Model e: $1.1 billion in revenue, $1.143 billion in EBIT loss
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Ford Pro: $17 billion in revenue, $2.564 billion in EBIT
“Ford+ is on track, our underlying quality is improving, and Ford Pro is showing the tremendous upside we have across all of our businesses,” Ford CEO Jim Farley said in the earnings release. “The transparency and accountability of having separate teams focused on the needs of different customers is leading to better decisions and greater value for everyone.”
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Ford Pro is a bright spot for the automaker, with profits from the commercial unit exceeding its traditional Ford Blue gas-powered vehicle business. On the other side is Ford’s Model and EV unit, which 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 U.S. deliveries in the first quarter were relatively flat in the quarter, up 0.8% year over year to 536,050 vehicles, but EV sales jumped 61.4% in the quarter, driven by sales of the Mustang Mach-E, Ford Lightning pickup truck and E-Transit EV van. Hybrid sales also increased in the second quarter by 55.6%.
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Ford also saw a recovery in its pickup truck sales, with that segment rising 4.5% to 308,920 units in the second quarter. The Ford Ranger, Maverick and Expedition boosted results, but F-Series pickup truck sales fell 6% as Ford’s launch of the new F-150 was delayed earlier in the year.
A driver tests a 2024 Ford Mustang Mach-E electric car on a test track at the Electrify Expo at The Yards, Sunday, July 14, 2024, in north Denver. (AP Photo/David Zalubowski) (ASSOCIATED PRESS)
The F-Series and Super Duty commercial trucks that drive Ford Pro’s results are crucial to Ford’s bottom line this year and beyond. In fact, Ford announced last week that it will increase Super Duty production by converting its Oakville assembly plant intended for EV trucks into Super Duty trucks through 2026 as Ford tries to meet demand for its larger Super Duty trucks.
The pushback against electric vehicles in Oakville comes as Ford has delayed electric vehicle production at its massive BlueOval City EV campus in Tennessee to 2026, down from an initial 2025 date.
Pras Subramanian is a Yahoo Finance reporter covering the auto industry. You can follow him on Twitter is at Instagram.
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