In a testament to the enduring appeal of its diverse vehicle lineup, Ford Motor Company has emerged as the leading gas vehicle brand, the second in electric, and third in hybrid vehicle sales in the United States. President and CEO Jim Farley attributes this success to the ongoing execution of the customer-focused Ford+ plan, emphasizing disciplined capital allocation and long-term growth.
“Ford+ is on track, our underlying quality is improving, and Ford Pro is showing the huge upside we’ve got in all our businesses,” Farley stated. He credits the company’s strategic and financially durable approach, which includes transparency and accountability, for better decision-making and increased value for customers.
Financial Performance and Quality Improvements
Ford’s second-quarter revenue saw a 6% year-over-year increase, reaching $47.8 billion, driven by the success of models like the all-new F-150 pickup and record volumes of Transit commercial vans. Despite an increase in warranty reserves, the company reported a net income of $1.8 billion and adjusted EBIT of $2.8 billion.
Significant strides in vehicle quality were highlighted by a 14-spot jump in J.D. Power’s 2024 U.S. Initial Quality Study, with the Bronco Sport recognized as the best small SUV for initial quality and Lincoln noted for its enhanced performance. Ford Vice Chair and CFO John Lawler pointed out that these improvements are reducing incidents in the first three months of service, a key indicator of future warranty costs.
Robust Cash Flow and Investment in Growth
The second quarter saw Ford generating $5.5 billion in operating cash flow and $3.2 billion in adjusted free cash flow. The company’s balance sheet remains strong with nearly $27 billion in cash and $45 billion in liquidity, enabling continued investment in growth and returns to shareholders.
A notable decision to add a third North American assembly plant to produce Super Duty trucks underscores the demand for these models. Starting in 2026, the Oakville Assembly Complex in Ontario will boost capacity by up to 100,000 units, including a multi-energy version in the future.
Segment Highlights and Future Outlook
Ford Pro, the commercial vehicle segment, posted a 7% increase in EBIT to $2.6 billion, with a 9% revenue increase to $17.0 billion. The segment is capitalizing on strong demand for Super Duty trucks and Transit vans, alongside a 35% rise in subscriptions to Ford Pro software and a doubling of mobile repair orders.
Ford Blue, the traditional internal combustion engine segment, saw revenue grow 7% to $26.7 billion, although higher warranty costs led to a decline in EBIT to $1.2 billion. Hybrid vehicle sales increased by 34%, now accounting for nearly 9% of all Ford vehicles worldwide.
Ford Model e, the electric vehicle segment, reported an EBIT loss of $1.1 billion due to pricing pressures and lower wholesales, despite $400 million in cost reductions. Meanwhile, Ford Credit earned $343 million before taxes in the second quarter.
Looking ahead, Ford expects a solid full-year 2024 performance, maintaining its adjusted EBIT guidance range of $10 billion to $12 billion and raising its adjusted free cash flow expectations by $1 billion to between $7.5 billion and $8.5 billion. Capital expenditures for the year are projected to remain between $8.0 billion and $9.0 billion.
Conference Call and Forward-Looking Statements
Ford will discuss these results and its future outlook in a conference. The company remains optimistic about the benefits of its Ford+ strategy, despite acknowledging various risks, including supply chain dependencies and market fluctuations. Ford’s forward-looking statements emphasize the company’s commitment to navigating these challenges to achieve sustained growth and value creation.
