In Q2, Ford Motor's revenue increased by more than 6% instead of decreasing. The EPS profit decreased by 35% year-on-year, which was much lower than expected. The EBIT profit of commercial vehicles is more than twice that of fuel vehicles. The increase in car repair reserve affects profits. The electric vehicle business lost more than $1 billion per quarter in the first half of the year. Ford still expects the business to lose as much as $5.5 billion for the whole year, and has raised the full-year free cash flow guidance by $1 billion, disappointing investors by not raising the full-year EBIT profit guidance.
American old giant auto maker$Ford Motor (F.US)$In the second quarter, the degree of profit decline exceeded Wall Street's expectations, reflecting the serious drag of warranty costs on company profits amid the slowdown in the auto market growth.
Ford Motors released its second-quarter financial results on Wednesday, July 24, Eastern Standard Time.
1) Main financial data
Revenue: Q2 revenue was $47.8 billion, up 6.2% YoY, increasing as compared with analysts' expectations of a 3.6% decrease to $43.37 billion.
EBIT: Q2 adjusted earnings before interest and taxes (EBIT) were $2.8 billion, down 26.3% YoY, falling as compared with analysts' expectations of a 1.8% decline to $3.73 billion.
EPS: Q2 adjusted EPS was $0.47, down 34.7% YoY, lower than analysts' expectations of a 6.9% decline to $0.67.
FCF: Q2 adjusted free cash flow (FCF) was $3.2 billion, up 10.3% YoY.
2) Breakdown of business revenue
Traditional fuel business Ford Blue: In Q2, Ford Blue's revenue was $26.7 billion, higher than analysts' expectations of $25.63 billion. Quarterly EBIT was $1.171 billion, lower than analysts' expectations of $2.43 billion, and an improvement from a loss of $1.137 billion a year ago. The Q2 profit margin was 4.3%, down 5.6 percentage points YoY.
Electric vehicle business Ford Model e: In Q2, Ford Model e's revenue was $1.1 billion, lower than analysts' expectations of $1.31 billion. Quarterly EBIT was a loss of $1.143 billion, lower than analysts' expectations of a loss of $1.38 billion, and an improvement from a loss of $63 million a year ago. The Q2 profit margin was -194.8%.
Commercial vehicle business Ford Pro: In Q2, Ford Pro's revenue was $17 billion, higher than analysts' expectations of $16.48 billion. Quarterly EBIT was $2.564 billion, up from $0.173 billion a year ago. The Q2 profit margin was 15.9%, up 2.9 percentage points YoY.
3) Performance outlook
The full-year adjusted EBIT forecast of $10 billion to $12 billion remains unchanged, as analysts expect $11.23 billion.
The full-year Ford Blue EBIT forecast is $6 billion to $6.5 billion, down from the previous estimate of $7 billion to $7.5 billion.
The full-year Ford Pro EBIT forecast is $9 billion to $10 billion, up from the previous estimate of $8 billion to $9 billion.
The full-year Ford Model E EBIT forecast remains unchanged at a loss of $5 billion to $5.5 billion.
The full-year capital expenditure forecast of $8 billion to $9 billion remains unchanged, as analysts expect $8.39 billion.
The full-year FCF forecast is $7.5 billion to $8.5 billion, up $1 billion.
Ford Motor's stock price plummeted during Thursday's trading, down 14.7% to $11.66 at the time of publication.
The increase in warranty reserves affects the company's profits.
Ford said that because it needs to increase the warranty reserves for expenses related to vehicle problems, the company's profitability has been affected. Ford's CFO John Lawler said that these warranty costs are related to models from 2021 or earlier.
At the same time, Ford mentioned bullish profitability, stating that the company's efforts to improve the quality of new products are beginning to pay off, which has a positive impact on customer satisfaction and Ford's operational performance.
Lawler said: "We have made real progress in improving quality, reducing costs and reducing the complexity of the entire enterprise. We have made real progress in quality, which will benefit us in the future."
Still expect electric vehicle business to lose as much as $5.5 billion for the year, unchanged annual EBIT profit guidance disappoints investors.
According to the financial report, Ford Motors' overall revenue in Q2 was better than expected, increasing instead of decreasing, thanks to the significant growth of its traditional auto business Ford Blue exceeding expectations, while its electric vehicle business continued to suffer losses. The commercial vehicle business unit Ford Pro was a bright spot, with profits more than twice that of the traditional fuel car business profit.
Ford's electric vehicle business, Ford Model E, has lost over $1 billion each quarter in the first two quarters of this year. Ford still expects the business to lose as much as $5.5 billion for the year, meaning the losses in the second half of the year will expand.
Looking ahead, Ford has lowered its EBIT profit guidance for Ford Blue by $1 billion and increased its EBIT guidance for Ford Pro by $1 billion. At the same time, Ford's EBIT guidance for the whole year remains unchanged. Some commentators have said that some investors expected Ford to raise its full-year profit guidance, and keeping the guidance unchanged shows that Ford's full-year guidance has not improved further, disappointing investors.
Editor/Somer