Ford keeps having to repair customers’ new cars and trucks. Its profit is plunging and its stock tumbled
The company (F) did not break out how much extra money it set aside to cover warranty expenses but said “most” of the $1.2 billion drop in operating income in the quarter came from that increased expense. Still, Ford said it is making gains in product quality, despite the increased costs.
“We still have lots of work ahead of us to raise quality and reduce costs and complexity, but the team is committed and we’re heading in the right direction,” said Ford CFO John Lawler in the company’s earnings report.
The company’s adjusted net income fell $1 billion to $1.9 billion, or 47 cents a share. That badly missed analysts’ forecasts of earnings per share of 68 cents a share.
The company Model e unit, which includes its electric vehicle sales to consumers rather than businesses, had an operating loss of $1.1 billion, but that was essentially unchanged from a year ago. It was the nearly 50% drop in operating profit in Ford Blue, which includes traditional gasoline-powered cars and truck sales to consumers, that hurt its bottom line. Ford Pro, which includes fleet sales to businesses and governments, reported a modest gain in operating profits.
Revenue rose 6% to $4.7 as the number of vehicles sold edged up 2% to 1.1 million worldwide.
Despite the increased warranty expenses causing a significant decrease in the company's operating income, Ford continues to focus on improving product quality in its business. Moreover, the company's CFO highlights the need to further reduce costs and complexity in the business, signaling an ongoing commitment to business efficiency.
