Ford Shares Drop Sharply After Earnings Miss Due to High Costs and EV Losses
Shares of Ford Motors fell over 12% after the automaker missed second-quarter profit estimates due to higher costs and competition in its electric vehicle (EV) business. The company reported an adjusted profit of 47 cents per share, falling short of analysts' expectations of 68 cents. The stock dropped 11% in after-hours trading in New York and 8% in Frankfurt, potentially resulting in a $7.22 billion loss in market capitalization at the current share price of $11.86.
The increased costs, including an $800 million rise in warranty expenses, significantly impacted profits in Ford's Blue combustion and hybrid vehicle business. The company also reported a 4.7% decline in Q2 net income compared to the previous year, with the combustion engine unit posting a pretax loss. Despite these challenges, Ford maintained its full-year guidance for pretax income between $10 billion and $12 billion. Additionally, the automaker's revenue for the quarter was $47.8 billion, a 6.3% increase over the expected $44.95 billion.
Ford's EV segment, Ford Model e, continues to face profitability challenges, with a projected loss of $5.0 to $8.5 billion this year. The company also reported a $1.1 billion operating loss for its electric vehicle and software division in Q2. Despite the disappointing earnings, Ford's commercial and software unit, Ford Pro, saw a 9% increase in revenue to $17 billion. CEO Jim Farley remains optimistic about addressing quality control issues and meeting warranty cost expectations in the second half of the year.
