Ford’s earnings underscore strength in Ford Pro, steady cash flow, and expanded EV strategy
Ford Motor Company (F) has unveiled its third-quarter financial performance for 2024, showcasing a steady growth trajectory while making significant strides in electric vehicle (EV) expansion and digital services. The automaker reported $46 billion in quarterly revenue, up 5% year-over-year, marking a milestone of ten consecutive quarters of revenue growth. However, the results also reflect the evolving challenges in the EV sector, with a previously announced $1 billion EV-related charge impacting net income, which came in at $0.9 billion.
Ford Pro Drives Growth with Higher Margins and Expanded Services
A major highlight of Ford’s results was the continued growth of Ford Pro, its dedicated business line for commercial vehicles and services, which generated $1.8 billion in adjusted earnings before interest and taxes (EBIT). This segment’s robust 13% revenue increase to $15.7 billion was largely attributed to high demand for the company’s Super Duty trucks and Transit vans. Additionally, Ford Pro Intelligence, Ford’s suite of paid software services for fleet management, saw subscriptions rise 30% to nearly 630,000, reflecting a surging market demand for remote and digital solutions in the commercial vehicle sector.
“Our strong positioning with Ford+ reflects Ford’s adaptive strategy amid an industry transformation,” Ford President and CEO Jim Farley said. He emphasized Ford’s commitment to creating strategic advantages, particularly in software, next-gen EVs, and core areas like Ford Pro.
Ford Blue and Hybrid Expansion Strengthen Core Operations
Ford Blue, the company’s traditional internal combustion engine (ICE) division, continued to contribute significantly to revenue with a 3% increase to $26.2 billion, despite facing a 2% drop in global wholesales due to discontinued low-margin ICE vehicles. In North America, Ford’s new truck and SUV launches contributed to an 8% increase in volume, pushing its U.S. market share up to 12.6%. Ford Blue’s adjusted EBIT came in at $1.6 billion, but it faced headwinds from adverse currency exchange rates and increased manufacturing costs.
A notable area of growth within Ford Blue is hybrid vehicle sales, which rose by 30% year-over-year. Ford now controls a commanding 77% share of the U.S. hybrid truck market, further solidifying its position as a leader in this space. Hybrid trucks saw a 42% sales boost, with the company’s hybrid mix expected to rise to 9% by the end of the year. This expansion aligns with Ford’s goal to cater to customers looking for fuel-efficient alternatives in the truck segment, highlighting hybrids as an essential component of the company’s electrification strategy.
EV Strategy: Navigating Challenges with Model e
The Model e division, Ford’s dedicated EV unit, reported an adjusted EBIT loss of $1.2 billion, largely driven by industry-wide pricing pressure, though the company managed $500 million in cost improvements year-over-year. In an effort to enhance profitability in this segment, Ford has focused on streamlining costs and expanding customer access to EV charging through the Ford Power Promise for at-home solutions and an extended public charging network. Ford’s nearly 3,000 authorized EV dealers nationwide also offer a significant competitive advantage, enabling broader adoption in markets that may be slower to embrace EVs.
Despite short-term losses in the EV segment, Ford remains committed to long-term EV growth, with Farley reiterating Ford’s strategy to “remove barriers to EV adoption.” This approach underscores Ford’s broader mission to compete aggressively in the EV market, even as the segment faces pricing and cost challenges.
Ford Credit and Financial Flexibility
Ford Credit, the automaker’s financial services arm, played a supportive role in Ford’s overall financial performance, reporting earnings before taxes (EBT) of $544 million, a $186 million increase year-over-year. The division’s solid performance reflects stable demand for Ford’s financing products and services, helping bolster cash flow and providing Ford with strategic flexibility amid a dynamic industry landscape.
The company ended the quarter with approximately $28 billion in cash and $46 billion in liquidity, emphasizing its robust financial footing. Adjusted free cash flow reached $3.2 billion, supported by strong cash flow from operations totaling $5.5 billion. This liquidity provides Ford with a critical cushion to pursue growth initiatives, including capital investments in EV technology and infrastructure.
Outlook for 2024: Balancing Growth, Costs, and EV Investment
Ford’s full-year guidance reflects both optimism in its established segments and caution in the face of EV-related costs. The company now expects adjusted EBIT for 2024 to be around $10 billion, with adjusted free cash flow projected between $7.5 billion and $8.5 billion. This forecast demonstrates Ford’s confidence in its ability to manage costs and maintain profitability, even as it invests heavily in its EV portfolio.
Ford Pro’s annual adjusted EBIT is expected to reach about $9 billion, while Ford Blue is forecasted to bring in around $5 billion. However, Ford Model e is projected to incur a full-year loss of approximately $5 billion, underscoring the challenges and investments necessary to remain competitive in the EV sector. Ford Credit anticipates an EBT of about $1.6 billion for the year, contributing to Ford’s overall financial stability.
John Lawler, Ford’s Vice Chair and CFO, attributed the company’s steady performance to recent global restructuring efforts and a focus on core segments where Ford has demonstrated expertise. “The work we have done over the past few years to restructure our global business—and tailor our product lineup to segments where we know our customers best—is driving continued growth and generating stronger and more consistent cash flow,” Lawler said.
Dividends and Future Prospects
Ford also announced a fourth-quarter dividend of 15 cents per share, payable on December 2 to shareholders of record as of November 7. This dividend underscores Ford’s commitment to returning value to shareholders even as it navigates significant investments in EV and digital transformation.
Looking forward, Ford remains well-positioned to capitalize on its momentum in hybrid and EV segments, while Ford Pro’s growing digital services highlight the potential for sustained growth in the commercial market. Ford plans to release its fourth-quarter results on February 5, 2025, providing further insights into its progress and strategic direction in an increasingly competitive automotive landscape.
With strategic moves to bolster its financial and operational resilience, Ford’s third-quarter results underscore a company adapting to an evolving market, balancing innovation with cost management to drive future growth.
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