Ford Motor Company (NYSE: NYSE:) reported a big drop in second-quarter earnings, with adjusted earnings per share (EPS) of $0.47, missing analysts’ estimates of $0.68.
The company’s fourth-quarter revenue was $47.8 billion, slightly below the consensus estimate of $48.09 billion.
Second-quarter earnings before interest and taxes were $2.8 billion, also below the consensus estimate of $3.8 billion.
After the earnings announcement, Ford’s stock fell more than 13%.
However, analysts at Piper Sandler believe the stock price decline was primarily driven by “unwanted warranty headwinds,” rather than earnings shortfalls. They highlighted that the automaker cited quality issues with 2016 and 2021 model year vehicles, and “to address these concerns, the company is taking on a higher-than-expected warranty burden.”
“As a result, earnings before interest and taxes remained flat compared to the first quarter, despite revenue increasing 12% quarter-on-quarter,” they added.
Ford CEO Jim Farley emphasized the positive aspects of the quarter, citing the success of Ford Pro, which posted quarterly EBITDA of $2.6 billion, a 15% margin, with revenue up 9%.
He also pointed to a 34 percent increase in hybrid sales, which now account for nearly 9 percent of Ford’s global vehicle mix, and a cost reduction for the Ford Model E of about $400 million.
Looking ahead, Ford is maintaining its full-year 2024 adjusted EBITDA forecast at $10 billion to $12 billion. Additionally, the company increased its adjusted free cash flow forecast by $1 billion, now expecting it to be in the range of $7.5 billion to $8.5 billion.
This adjustment reflects Ford’s confidence in its cash-generating capabilities and continued execution of its Ford+ plan, which aims to lay the foundation for long-term profitable growth.
In his statement, Farley highlighted the strategic progress made under the Ford+ plan, noting improved core quality and upside potential across all business segments. “Ford+ is on the right track, our core quality is improving, and FordPro demonstrates the tremendous upside we have across all of our businesses,” Farley said.
“The transparency and accountability that comes from having separate teams focused on different customer needs leads to better decisions and greater value for everyone.”