Ford Motor Co.’s (F) stock is down 13% after the automaker reported a big miss for its second-quarter profit.
The Detroit-based company announced earnings per share (EPS) of $0.47 U.S. versus $0.68 U.S. that had been the consensus expectation of analysts.
Revenue in Q2 managed to top estimates, coming in at $44.81 billion U.S. compared to $44.02 billion U.S. that was forecast on Wall Street. Sales were up 6% from a year earlier.
Executives at Ford blamed the profit miss on warranty costs that have been a problem for the company for several years.
Specifically, management said that profitability was negatively impacted by increases in its warranty reserves that are used to pay for vehicle problems.
The costs are related to vehicles for the 2021 model year or older that have been recalled due to safety issues.
Ford said recent initiatives to improve quality and vehicle launches should help to bring down future warranty costs.
The company’s traditional business operations, known as “Ford Blue,” earned $1.17 billion U.S. during the second quarter, while its Ford Pro commercial business earned $2.56 billion U.S.
However, Ford’s electric vehicle unit lost $1.14 billion U.S. during Q2.
The automaker increased its full-year guidance for free cash flow but maintained its overall 2024 outlook, disappointing investors who had hoped for a guidance raise.
Ford’s full-year guidance calls for earnings of $10 billion U.S. to $12 billion U.S.
There was pressure on Ford to raise its full-year guidance after archrival General Motors (GM) lifted its guidance for the second time this year when announcing better-than-expected results.
Prior to today (July 25), the stock of Ford Motor Co. had risen 12% over the last year and was trading at $13.67 U.S. per share.
