Ford has reported strong second-quarter earnings of $1.9 billion, nearly triple the previous year's level, and revenue of $45 billion, a 12% increase.
The company's CFO, John Lawler, described the quarter as "really strong," attributing the success to better-than-expected pricing in the first half of 2023.
$4.5 Billion Operating Losses
While Ford's internal combustion engine (ICE) vehicle business performed well, the company also revealed operating losses of $4.5 billion in its electric vehicle (EV) business, a revision from the prior estimate of $3 billion.
Ford attributed this to a slower pace of EV adoption, but CEO Jim Farley emphasized the company's commitment to breakthrough EVs, indicating the potential for growth and resilience with Ford+.
"The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers like Ford," Farley said in a statement.
"EV customers are brand loyal and we're winning lots of them with our high-volume, first-generation products; we're making smart investments in capabilities and capacity around the world; and, while others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away."
Ford Pro, targeting commercial customers, achieved a 22% revenue growth, and the Ford Blue gas and hybrid business reported $2.3 billion in EBIT, with the new global Ranger pickup being popular and profitable.
The revenue from Ford Model E, the company's electric vehicle lineup, saw a substantial increase of 39%, positioning Ford as a leader in the next-generation EV industry. The company now aims to reach a 600,000-unit EV production run rate by 2024.
Ford raised its full-year 2023 guidance for adjusted EBIT to between $11 billion and $12 billion and for adjusted free cash flow to between $6.5 billion and $7 billion.
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Breakthrough EVs Underway
CEO Jim Farley emphasized Ford's agility in guiding customers through the evolving EV landscape and expressed confidence in the company's clean-sheet, next-generation products in advanced development. Ford believes early movers like them will benefit from the slightly slower pace of EV adoption.
The company's strong cash flow from operations and adjusted free cash flow of $5.0 billion and $2.9 billion, respectively, provide financial flexibility for investments and shareholder returns. Ford's balance sheet remains robust, with nearly $30 billion of cash and over $47 billion of liquidity.
"The shift to powerful digital experiences and breakthrough EVs is underway and going to be volatile, so being able to guide customers through and adapt to the pace of adoption are big advantages for us," said Farley.
"Ford+ is making us more resilient, efficient, and profitable, which you can see in Ford Pro's breakout second-quarter revenue improvement (22%) and EBIT margin (15%)."
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