Ford Motor reported a net income of $892 million for the third quarter of 2024, marking a 25% decrease compared to the previous year. This decline followed a previously anticipated $1 billion charge for canceling its all-electric three-row SUV program. Despite this setback, the automaker achieved revenue of $46 billion, up 5.5%, reflecting its tenth consecutive quarter of revenue growth, though it fell short of analysts’ earnings per share expectations.
CEO Jim Farley addressed the earnings results, emphasizing the company’s focus on cost management and quality improvement. “We’re going to continue to stay laser-focused on cost and getting leaner as a company,” he stated during an investor call. For the quarter, the automaker also reported adjusted operating earnings of $2.6 billion, an 18% increase year-over-year, while its net income margin improved from 5% to 5.5%. The company anticipates adjusted operating earnings for the year to reach around $10 billion, at the lower end of its earlier guidance.
Ford’s Chief Financial Officer, John Lawler, highlighted that the company has successfully reduced $2 billion in costs associated with materials, manufacturing, freight, and labor. However, unexpected warranty costs and inflation at its joint venture in Turkey offset these gains. Furthermore, supplier disruptions, influenced by recent hurricanes and ongoing challenges with key suppliers, have hindered production in the second half of the year.
Despite the mixed financial results, Lawler reassured stakeholders that Ford is well-positioned for future growth, maintaining a solid product portfolio and sufficient cash reserves. The company’s shares fell nearly 6% in after-hours trading following the announcement, reflecting investor concerns over rising inventory levels and their potential impact on margins.
Regarding operational performance, Ford’s internal combustion engine and hybrid vehicle business, Ford Blue, saw a 5.3% decline in operating income to $1.627 billion, prompting a reduction in its annual outlook for that division. Conversely, Ford Pro, the company’s commercial vehicle segment, posted robust results with over $1.814 billion in operating income, up 9.7% year-over-year.
Additionally, Ford’s electric vehicle unit, Model E, reported a loss of $1.224 billion, slightly better than the previous year’s loss of $1.329 billion. Ford projects a $5 billion loss for Model E in 2024, down from its earlier forecast of $5 billion to $5.5 billion. The automaker has implemented significant cost cuts in its EV division, including a 35% reduction in production capacity for its Mustang Mach-E.
Despite these challenges, Ford is optimistic about its upcoming product launches, including refreshed versions of the Maverick compact truck and Bronco Sport SUV, which are expected to help mitigate warranty costs. The company also plans to continue offering incentives, such as covering the costs of home chargers for new Ford EV buyers, to boost sales.
As the automotive landscape continues to evolve, Ford faces ongoing challenges but remains committed to its strategic vision and cost-reduction initiatives to navigate the industry’s complexities.
