Ford Motor Co (F) Q3 2024 Earnings Call Highlights: Revenue Growth and Strategic Challenges

GuruFocus News
3 min read

In This Article:

Release Date: October 28, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Ford Motor Co (NYSE:F) reported a 5% increase in revenue, marking the 10th consecutive quarter of year-over-year revenue growth.

  • The company's restructuring efforts in international markets have turned previously loss-making regions into profitable ones.

  • Ford's EV strategy is progressing, with significant cost reductions achieved in the Mustang Mach-E, reducing costs by $5,000 per unit.

  • Ford Pro continues to show strength with a 13% increase in revenue and a healthy EBIT margin of 11.6%.

  • The company has a strong balance sheet with $28 billion in cash and $46 billion in liquidity, providing flexibility for future investments.

Negative Points

  • Ford Motor Co (NYSE:F) is facing higher than expected warranty costs, which are impacting overall profitability.

  • The company is experiencing pricing pressures in the EV market due to increased competition and a global price war.

  • Supply chain disruptions have led to lower than planned volumes in the second half for Ford Pro and Ford Blue.

  • Inflationary pressures, particularly in Turkey, are increasing material costs for Transit vans sold in Europe.

  • Despite cost reduction efforts, Ford has not closed the cost gap with competitors, indicating a need for accelerated cost-cutting measures.

Q & A Highlights

Q: Can you explain the moderation in Ford Pro's EBIT margin this quarter and your outlook for the segment? A: John Lawlor, Vice Chair and CFO, explained that the moderation was due to seasonality, including the peak and fall-off of the rental business and plant shutdowns. Despite this, strong demand for Super Duty and Transit vehicles continues, and the segment remains robust with ongoing traction in selling solutions that improve customer productivity.

Q: What are the expectations for Model Y's improved EBIT trajectory next year, considering recent cost and capacity actions? A: Jim Farley, President and CEO, noted that scaling in Europe and cost reductions on first-generation products are contributing positively. However, pricing pressures remain a risk, particularly in Europe. The focus is on cost improvements and leveraging production tax credits to enhance profitability.

Q: How is Ford addressing warranty costs, and are there signs of improvement? A: John Lawlor acknowledged improvements in leading indicators like service quality and launch spikes. However, uncertainty remains regarding older models and potential future costs. The Company is focused on addressing these issues through OTAs and other measures.

Recommended Stories