Ford Profit Falls Short on Quality Woes, Warranty Costs
[Stay on top of transportation news: Get TTNews in your inbox.]
Ford Motor Co. posted second-quarter profit that fell short of Wall Street estimates, saying quality problems with new vehicles led to a surge in warranty costs.
The automaker on July 24 reported adjusted earnings of 47 cents a share, missing the 67 cents that analysts expected on average. Second-quarter revenue rose 6.2% to $47.8 billion.
“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,” Chief Financial Officer John Lawler said in a statement.
RELATED: Ford Recalls Over Half a Million 2014 F-150 Pickup Trucks
Ford reiterated its earnings outlook for the year, forecasting profit of $10 billion to $12 billion before interest and taxes. But that included lower guidance for Ford Blue, the unit that makes gas-powered vehicles and hybrids, because of quality woes. General Motors Co. on July 23 boosted its profit guidance for the year by $500 million to as much as $15 billion.
Ford has been ramping up production of traditional internal combustion engine models, including a redesigned version of its top-selling F-150 pickup truck, as mainstream buyers turn away from EVs due to high prices and a spotty charging infrastructure.
REVIEW FORD'S Q1: Ford Beats Sales Estimates on Strong Demand for Work Trucks
Last week, the company said it would begin building its big Super Duty pickups at a plant in Ontario that had previously been slated to produce an electric sport utility vehicle that the company has delayed by two years. CEO Jim Farley has said Ford’s EV unit, which it projects will lose as much as $5.5 billion this year, is the “main drag on the whole company.”
Shares of Ford fell as much as 11% to $12.23 in extended trading after the results were announced.
As Ford has boosted production of money makers like the beefy Bronco SUV, investors had warmed to the stock, driving up shares 18% since mid-June by the close July 23. For the year, Ford is up 13%.
Want more news? Listen to today's daily briefing below or go here for more info:
