Ford Motor (F) Q3 2024 earnings

DETROIT – Ford engine The company was at the low end of its previously announced 2024 profit guidance 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 (EBIT) of about $10 billion. Previously it was assumed that it would be between 10 and 12 billion US dollars. The company maintained its guidance for adjusted free cash 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 due to slowing demand, rising vehicle inventories and concerns about Ford's ability to meet its announced $2 billion in cost cuts this year year would have to be reduced.

“Our focus remains on cost and quality, which are slowing our progress and represent tremendous growth potential,” John Lawler, Ford CFO 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 wiped out those improvements and “held the company back from a record year.”

Here's how the company performed in the third quarter compared to 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 in which unexpected warranty costs caused the company to miss Wall Street's earnings expectations.

Lawler said the company's third-quarter warranty costs were slightly lower year-over-year after increasing $800 million year-over-year in the second quarter.

“It's an improvement, but it's not as big as we'd like to see,” Lawler said, declining to disclose total costs during the period.

Ford's third-quarter results were led by its “Pro” commercial vehicle and fleet businesses, as well as its traditional division, known 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 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 division posted losses of $1.22 billion in the third quarter, lower than a year earlier, largely due to lower volumes and cost cuts.

Ford CEO Jim Farley told investors on Monday that the company continues to believe in its EV strategy; However, the automaker has cut back on many vehicle investments to focus 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 in the third quarter. It was the company's 10th consecutive quarter of year-over-year revenue growth.

Farley noted that the company's operations in China, where legacy automakers have increasingly struggled, contributed more than $600 million to the company's EBIT. This also includes Ford's plans to increase vehicle exports from the country.

Farley also discussed the company's increasing inventory of new vehicles. Ford had 91 days of gross inventory, including company-owned vehicles, and 68 days on dealer lots at the end of the third quarter, worrying investors.

He said the mix and price of these vehicles is “really good” and that the company is holding back some inventory to support the vehicle transition in early 2025.