Ford reported a 26-percent drop in third-quarter net income, mainly due to costs arising from delays with certain electric models. Ford also revised down its full-year earnings projection, citing cost concerns.
Revenues up despite everything
Despite the drop in net income, Ford saw adjusted earnings before interest and taxes (EBIT) rise by 16 percent to $2.6 billion USD. Company revenues rose by 5% to USD 46 billion.
Revised profit forecasts for the year
Ford now expects adjusted EBIT for the year to be close to $10 billion, down from previous forecasts of up to $12 billion. Lawler pointed out that the company has achieved cost reductions of $2 billion this year, but that these savings are offset by inflation and increased warranty spending.
Cost reductions and quality improvements
Ford recently adjusted its executive bonus system to better align financial rewards with cost and quality criteria. This change has already brought encouraging results, especially in terms of vehicle launches and vehicles in their first three months of service.
Divisional performance: Ford Pro up, Model e down
Ford Pro's commercial vehicle division reported a 9.7-percent rise in profits to $1.8 billion, while Ford Blue's combustion vehicle division saw a 5.3 percent drop to $1.6 billion. As for the Model e electric division, it posted a loss of $1.2 billion, albeit a 7.9-percent improvement on last year.
Increased cash flow and outlook for 2024
Ford Credit profits jumped 52 percent to $544 million USD, while Ford's adjusted free cash flow increased by $2 billion to $3.2 billion for the quarter. The automaker is also maintaining its adjusted free cash flow guidance for the year at between $7.5 and $8.5 billion.
Ford shares lost 6 percent in after-hours trading.
The final word
Although Ford continues to show signs of growth and financial improvement, cost-related challenges, particularly warranty costs, are hampering its profitability potential.
The adjustments undertaken, particularly in the areas of cost reduction and quality, could however offer promising financial prospects for the future.