Ford: increasing profits from sales of utility vehicles, but electric cars are still not updated – 04/25/2024 at 00:18

(Automatic translation by Reuters, please see disclaimer

(Adds Ford comments from the conference call, analyst comments, charts, and stock trading updates) by Nora Eckert

Ford Motor Co FN reported first-quarter results on Wednesday that beat Wall Street expectations, helped by strong performance in its commercial vehicle division and increased sales of its hybrid vehicles.

The company said it expects to hit the high end of its annual forecast of $10 billion to $12 billion in earnings before interest and taxes. Ford shares rose more than 3% after the news was released.

However, Ford is facing what Chief Executive Jim Farley called “a big drag not just for Ford, but for our entire industry”: the production of electric vehicles.

The automaker reported an operating loss of $1.3 billion for its EV and software division in the first quarter. More broadly, executives expect this segment of the business to post a pretax loss of between $5 billion and $5.5 billion a year.

In the near future, hybrids are a top priority for Ford to ease customers’ transition to a battery-powered future, and the automaker aims to increase hybrid sales by 40% this year and quadruple in the coming years.

Farley said he had lowered some of Ford’s electric car expectations to meet consumer demand. This month, Ford delayed the planned launch of three electric vehicles in Canada and its next-generation electric pickup truck built in Tennessee. Executives have said they won’t release the next generation of Ford EVs until they are profitable.

The EV industry has proven difficult not only for traditional manufacturers like Ford, but also for EV industry players like Tesla. TSLA.O

Elon Musk’s company recently cut 10% of its global workforce and on Tuesday posted the first drop in quarterly earnings since the pandemic.

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Ford expects EV production costs to drop, but they will largely face significant pricing pressure from industry competitors, Chief Financial Officer John Lawler said.

“Over the last 12 to 18 months, we’ve seen a continued decline in revenue, which wipes out any savings we’ve made from a cost perspective,” he said of the electric vehicle business.

Ford is also moving to produce larger electric trucks and SUVs, as well as cheaper, smaller EVs, developed by a team at the “skunkworks” in California.

The company reported an exceptional 13% drop in gasoline engine sales in the quarter, which was due to the launch of the new F-150 pickup truck.

The automaker may conduct slower, more focused launches in the coming days as part of its efforts to eliminate price-quality problems, executives said.

The Dearborn, Mich.-based automaker’s sales force continues to underline its importance, and the company is banking on the division’s software-related services to boost profits in the coming years. The division posted operating profit margins of around 17% during the quarter.

Ford reported adjusted quarterly earnings of 49 cents per share for the quarter ended March 31, compared with 63 cents per share a year earlier.

Analysts, on average, had expected Ford to report adjusted earnings of 40 cents per share, according to LSEG data.

General Motors GM.N on Tuesday reported quarterly results that beat Wall Street targets and the automaker raised its annual forecast, citing strong prices and demand for gasoline-powered vehicles.

Some analysts have raised concerns about the general economic environment in which Ford and other automakers operate.

“With auto inventories now at record highs and interest rate conditions high for the foreseeable future, we expect new car prices to remain under pressure and incentives to continue to rise,” said Garrett Nelson, an analyst at CFRA Research, in . research note.