Summary
- Ford’s net income in the second quarter fell 4% to $1.8 billion attributed to increased warranty expenses and new vehicle launches
- Ford posted adjusted operating earnings of $2.8 billion, down 27% from the same period last year
- Ford’s revenue for the quarter was $47.8 billion, up 6% from a year ago
- Ford’s electric vehicle business posted a loss of $1.1 billion in the second quarter
- Ford raised adjusted free cash flow outlook by $1 billion and maintained adjusted earnings before interest and taxes (EBIT) guidance for the full year at $10 billion to $12 billion
Article
Ford Motor Co. reported a 4% decrease in net income in the second quarter of 2024, totaling $1.8 billion. The decline was attributed to increased warranty expenses and the launch of new vehicles. The company also acknowledged continued losses on electric vehicles. Adjusted operating earnings for the same period were $2.8 billion, which represented a 27% decrease from the previous year. Despite these challenges, Ford’s revenue for the quarter saw a 6% increase to $47.8 billion.
Ford’s CFO John Lawler stated that the increased warranty costs were unplanned and amounted to a $700 million increase compared to the same period in 2023. Additionally, there was an $800 million increase from the first quarter of 2024. Total warranty costs for the quarter were estimated to be in the range of $1.5-$2 billion. However, Lawler emphasized that this issue was a one-time occurrence, and the company’s expectations for full-year adjusted earnings before interest and taxes (EBIT) were maintained at $10 billion to $12 billion. Ford also raised its adjusted free cash flow outlook by $1 billion, now projecting it to be between $7.5 billion and $8.5 billion.
The automaker’s electric vehicle business continued to incur losses, amounting to $1.1 billion in the second quarter. CEO Jim Farley had previously restructured the company into Ford Blue, Ford Model e (electric vehicles), and Ford Pro (commercial products) in 2022. Despite this, Ford faced challenges with its EV sales, necessitating the decision to shift production of a three-row electric utility vehicle to another plant. The company did not disclose the details of where this production would be relocated but announced that the Oakville Assembly Complex in Ontario would now produce Super Duty trucks to meet the increasing demand from its Ford Pro unit.
Meanwhile, General Motors (GM) reported a 37% increase in adjusted pretax income in the second quarter of 2024, reaching $4.4 billion. This growth was credited to strong sales of gasoline-powered pickups and SUVs, as well as improving sales of electric vehicles and stable pricing with low incentives. As a result, GM raised its guidance for full-year earnings, now expecting a pretax income of $13 billion to $15 billion as opposed to the previous range of $12.5 billion to $14.5 billion. Stellantis, the parent company of Jeep, Ram, Chrysler, Dodge, and Fiat, is set to announce its earnings for the first half of 2024 on Thursday.
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