Ford shares fell 12% at one stage in after-hours trading after it surprised the markets with a less-than-encouraging June quarter report. The report contained news that its EV division lost $US1.14 billion in the quarter and that warranty costs soared again.
The shares later edged higher but were still down more than 11% at 7:50 AM Sydney time.
Earnings were well short of market forecasts despite higher revenues of $US47.8 billion for the quarter, a 6.3% increase over the $US44.95 billion in the second quarter of 2023. That barely beat analyst forecasts of $US47.79 billion.
The reason for the weak earnings was the continuing costs of vehicle warranty problems that have bedeviled Ford for several years now.
Ford's Chief Financial Officer, John Lawler, said the company is making progress on quality improvements, and the latest warranty costs came from older vehicles from the 2021 model year and earlier.
The company said its second-quarter warranty costs were $US2.3 billion, $US800 million higher than the first quarter and $US700 million more than a year ago.
Ford Blue, the company’s internal combustion engine unit, made $US1.17 billion before taxes during the quarter, down $US1.1 billion from a year earlier.
Ford Pro, the commercial vehicle unit, made $US2.56 billion, $US173 million above 2023.
Model e, the electric vehicle unit, lost $US1.14 billion, $US63 million worse than a year ago.
Ford lifted its full-year target for free cash flow but maintained its 2024 earnings guidance, disappointing some investors who had hoped for an increase.
Ford’s guidance for the year includes adjusted earnings before interest and taxes (EBIT) of between $US10 billion and $US12 billion.
Ford’s second-quarter sales in the US, its most lucrative market, rose just under 1% to more than 532,000 vehicles.
