Ford Motor reported an adjusted profit of 47 cents per share, significantly missing analysts’ expectations of 68 cents, according to LSEG data. This underperformance highlights the financial strain the company is facing as it continues to address costly quality issues and the challenges posed by its electric vehicle (EV) business. The disappointing results have shaken investor confidence, resulting in an 11% drop in shares during after-hours trading.
Executives emphasized that Ford is actively working to root out structural inefficiencies and transform its operations, both in traditional gas-engine vehicles and the burgeoning EV sector. The company is implementing comprehensive changes aimed at improving its manufacturing processes and overall efficiency. However, despite these efforts, Wall Street remains unconvinced of the automaker’s progress. The significant gap between Ford’s current performance and market expectations underscores the skepticism among investors and analysts regarding the company’s ability to achieve a sustainable turnaround.
Morgan Stanley analyst Adam Jonas expressed this sentiment during the company’s conference call, telling Ford CEO Jim Farley, ‘You said that Ford’s a different company from what it was three years ago, but the stock market really doesn’t seem to agree with you at all on that.’
Since taking the helm in October 2020, Farley has prioritized resolving Ford’s quality issues. The company has since hired a new executive director of quality and overhauled some production practices to prevent errors, yet it continues to lead the industry in recalls.
Ford’s warranty expenses increased by $800 million in the second quarter compared to the previous quarter, according to Ford Finance Chief John Lawler. Lawler noted that most of these expenses were related to older vehicles launched in 2021 or earlier, describing the field service actions in the quarter as a one-time cost increase. He added that Ford expects its warranty costs for the second half of the year to align with its projections.
Despite these challenges, Ford maintained its annual earnings guidance of $10 billion to $12 billion before interest and taxes.
