Ford Beats Expectations in First Quarter Results
Ford reported its first quarter results on Wednesday, surpassing expectations and showcasing its changing product game plan. The company’s focus on gas and hybrid offerings, along with its updated guidance metrics, contributed to its success.
In terms of revenue, Ford reported $42.8 billion for the quarter, exceeding estimates of $40.04 billion and marking a 3% increase compared to the previous year. Adjusted earnings per share came in at $0.49, surpassing forecasts of $0.42, while adjusted EBIT reached $2.8 billion, higher than the estimated $2.54 billion. These results reflect an improvement from Q4 when the company faced challenges due to the United Auto Workers (UAW) strike.
Looking ahead, Ford expects its full-year adjusted EBIT to track towards the higher end of the $10 billion to $12 billion range. The company also raised its adjusted free cash flow target to $6.5 billion to $7.5 billion, with capital expenditures guidance tightened to $8 billion to $9 billion. Previously, Ford projected adjusted EBIT of $10 billion to $12 billion, adjusted free cash flow of $6 billion to $7 billion, and capital expenditures of $8 billion to $9.5 billion.
Following the release of the results, Ford shares saw a 3% increase in the following-hours session. This positive performance aligns with the recent strong Q1 results reported by General Motors (GM), which also raised its yearly profit outlook.
During the earnings call, Ford CEO Jim Farley acknowledged that the slower ramp-up of the all-new Ford F-150 impacted the company’s guidance update. Farley also announced a quarterly dividend of $0.15.
To further drive growth, Ford divided its business into three units as part of its Ford+ initiative: Ford Blue for traditional gas-powered autos, Ford Model e for the EV division, and Ford Pro for its commercial and super duty truck business. In Q1, Ford Blue generated $21.8 billion in revenue with an EBIT of $905 million, while Model e reported $100 million in revenue but an EBIT loss of $1.32 billion. Ford Pro delivered $18 billion in revenue with an EBIT of $3.01 billion.
Farley acknowledged the challenges faced by the EV division, stating, “We have to make tremendous progress on Model e, it’s a huge drag [on profits]. [The EV business] is the main drag on the company, and of the industry.”
Interestingly, during the first quarter, Ford shifted its focus towards gas and hybrid vehicles, temporarily minimizing investments in EV spending and production. This decision was evident in its recent update regarding the production timeline for its BlueOval City EV campus in Tennessee, which was pushed back to 2026. Ford is also rescheduling the launch of upcoming EVs at its Ontario plant, targeting a 2027 release for next-generation three-row EVs and possibly a full-size SUV.
Despite this change in strategy, Ford’s Q1 US deliveries increased by 6.8% to 508,083 vehicles, driven by strong sales of electrified products such as hybrids. The Maverick hybrid pickup experienced its best quarter ever, with sales jumping 77%. Overall hybrid sales recorded a 42% increase, reaching 38,421 units, reflecting Ford’s current success in this segment.
Even Ford’s EV portfolio defied recent market trends, with an 82% jump in sales to 20,223 EVs in Q1. The Mustang Mach-E and Lightning pickup saw impressive sales growth, increasing by 77.3% and 80.4% respectively. However, Ford relied on discounting, cheap financing rates, and lease deals to boost sales, ultimately impacting profitability.
As for Ford’s flagship F-150, sales declined by 10.2% in the quarter to 152,943 units. The slow ramp-up of the all-new F-150, which began sales in March, contributed to this decrease.
In conclusion, Ford’s first quarter results indicate a positive outlook for the company, fueled by its focus on gas, hybrid, and EV offerings. Despite the challenges faced in the EV sector, Ford’s strong performance in the hybrid market demonstrates its competitive edge. Moving forward, it will be crucial for Ford to make significant progress in its EV division to address the challenges and capitalize on the growing demand for electric vehicles.
Embedding of images and videos in the original article:
(Note: Original images and videos should be retained in the edited article)
– Image: The new Ford F-150 truck launched at a celebratory event at the Ford Dearborn Plant on April 11, 2024, in Dearborn, Michigan.
– Figure Caption: The new Ford F-150 truck is launched at a celebratory event at the Ford Dearborn Plant on April 11, 2024, in Dearborn, Michigan. (Photo by Bill Pugliano/Getty Images)
Sources: Original Article