TLDR:
- Ford reported Q3 revenue of $46.2B (5% YoY increase), beating expectations but guided to lower end of 2024 forecast
- Stock fell ~9% after earnings announcement despite better-than-expected Q3 results
- EV division posted $1.2B revenue with $1.22B loss; company expects full-year Model e losses around $5B
- Hybrid vehicle sales surged 38% YoY, led by Maverick pickup
- Company faces ongoing warranty costs and supplier disruptions affecting profits
Ford Motor Company’s stock dropped nearly 9% on Tuesday despite reporting better-than-expected third-quarter results, as the automaker guided to the lower end of its 2024 profit forecast and continued to face challenges in its electric vehicle division.
The Dearborn-based automaker reported third-quarter revenue of $46.2 billion, surpassing analysts’ expectations of $41.9 billion and marking a 5% increase from the previous year. Adjusted earnings per share came in at 49 cents, slightly ahead of the 47 cents consensus forecast.
Ford’s traditional internal combustion engine division, Ford Blue, generated $26.2 billion in revenue with $1.627 billion in earnings before interest and taxes (EBIT). The commercial division, Ford Pro, contributed $15.7 billion in revenue and $1.814 billion in EBIT.
However, the company’s electric vehicle unit, Model e, continued to face headwinds, posting revenue of $1.2 billion while recording a loss of $1.224 billion. Ford now expects full-year Model e losses to reach approximately $5 billion, though this represents a slight improvement from the previously projected $5.5 billion loss.
CEO Jim Farley addressed the challenges during the earnings call, noting that warranty costs have been a particular drain on earnings. “Costs, especially warranty, has held back our earnings power,” Farley stated, while expressing optimism about future cost reductions.
The company revised its full-year adjusted EBIT guidance to “about $10 billion,” at the lower end of its previous range of $10-12 billion. Ford CFO John Lawler attributed some of the challenges to supplier disruptions, particularly those caused by hurricanes in the southern United States.
Despite challenges in the EV sector, Ford’s hybrid vehicle sales showed strong momentum, increasing 38% year-over-year, driven primarily by demand for the Maverick pickup. The company’s overall U.S. deliveries rose 4.3% year-over-year to 504,039 vehicles in Q3.
The results included a previously announced $1 billion charge related to the cancellation of Ford’s all-electric three-row SUV program, with the company pivoting to focus on three-row hybrid SUVs instead.
Third-quarter net income reached $900 million, impacted by the one-time EV-related charge. The company maintained its projected adjusted free cash flow between $7.5 billion and $8.5 billion for the year.
Morgan Stanley maintained an equal-weight rating with a $12 price target, while Bank of America Securities reiterated a buy rating but reduced its price target to $19 from $20. Deutsche Bank kept its hold rating while lowering its price target to $10 from $11.
Farley highlighted potential improvements in EV costs through production tax credits, stating, “We really expect next year and the following years, a lot of progress in the production tax credit for our first-gen products.”
The company’s hybrid strategy appears to be paying off, with Farley noting strong demand for hybrid versions of the F-150 and Maverick. “Most of our competitors don’t offer hybrid on an F-150 or a Maverick,” he said. “This has been a fantastic revenue opportunity for us. We frankly can’t keep up with the demand.”
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
