Ford profit tops expectations on strong commercial, hybrid sales

By Thomson Reuters Apr 24, 2024 | 3:13 PM

By Nora Eckert

(Reuters) -Ford Motor Co posted first-quarter earnings on Wednesday that beat Wall Street’s expectations, bolstered by a strong performance in its commercial vehicle division and an increase in its hybrid vehicle sales.

The company said it expects to achieve the higher end of its projected annual guidance of $10 billion to $12 billion in earnings before interest and taxes. Ford shares rose 3.5% in after-market trading on the news.

The carmaker separately reports out results for its software and EV division, which it calls “Model e.” This section of the company recorded a $1.3 billion operating loss for the first-quarter. More broadly, executives expect the software and EV division to sustain between $5 billion and $5.5 billion in a pretax loss this year.

Earlier this month, Ford delayed the planned launches of three-row EVs in Canada and its next-generation electric pickup truck built in Tennessee. Executives have said that the next generation of Ford’s EVs will not be launched until they can be profitable.

Despite seeing a modest growth in EV sales, legacy automakers continue to see an overhang from higher costs in the supply chain required to produce those vehicles.

CEO Jim Farley said he has walked back some of the company’s EV ambitions to better match consumer demand. In the near term, hybrids are a top priority for Ford to ease customers into a battery-powered future.

The automaker is also shifting focus to producing larger electric trucks and SUVs, as well as affordable and smaller EVs that are being developed by a “skunkworks” team in California.

The Dearborn, Michigan, automaker’s strong commercial business continues to fuel its bottom line, and the company is betting on software-related services in this division to drive profits in the coming years.

The company posted quarterly adjusted earnings of 49 cents per share for the quarter ended March 31, compared with 63 cents per share a year earlier.

Analysts, on average, expected Ford to report an adjusted profit of 40 cents per share, according to LSEG data.

Additionally, legacy U.S. automakers are also dealing with expensive labor contracts that they have signed with the United Auto Workers (UAW) union.

General Motors on Tuesday reported quarterly results that topped Wall Street targets and the automaker raised its annual forecast, citing stable pricing and demand for gasoline-engine vehicles.

(Reporting by Nora Eckert in Detroit and Nathan Gomes in Bengaluru; Editing by Sriraj Kalluvila and Josie Kao)