Ford Motor Q1 Sales, Profits, Cash Flow Up. But…

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Late yesterday Ford Motor posted Q1 2023 revenue of $41.5 billion, up 20% from the same period a year ago on shipments ~1.1 million vehicles, a 9% increase with $1.5B in net income. A year ago Ford posted a net loss of $3.1 billion. However, in an SEC filing today, Ford said it projects restructuring charges between $1.5 billion and $2 billion in 2023 by reducing employees and exiting unprofitable locations. Brazil, Europe and India appear to be likely restructuring targets. US headcount cuts remains an open question.

“The first quarter of organizing around and running the company on behalf of distinct customer groups produced solid operating results and a glimpse of the promise of its Ford+ growth plan,” said Ford CEO Jim Farley. Ford reaffirmed guidance for full-year 2023 adjusted EBIT of $9 billion to $11 billion. Profitability in Q1 was helped by a favorable mix of products, higher net pricing and increased volume and was broadly based geographically. However its EV business is still hemorrhaging money, posting a loss of $722 million.

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Ford Credit’s earnings before taxes of $303 million were down from last year because of a lower financing margin, increased credit losses and a decline in leasing income. The company’s credit-loss performance remains below its historical average but is “trending upward toward more normal levels.” Auction values remain strong, though down from their peak in the first half of 2022.

Ford’s operating targets presume complicated variables:

• Headwinds – including economic uncertainty around the globe; higher industry-wide customer incentives, as vehicle supply-and-demand re-balances; a lower profit from Ford Credit; lower past service pension income; exchange rates; and growth-related investments, e.g., in customer experience, connected services and capital expenditures, and
• Tailwinds – such as supply chain improvements and higher industry volumes; launch of the all-new Super Duty truck; and lower costs of goods sold, including for materials and commodities.

Ford will host its next capital markets event on 21 and 22 May, where it will update investors, analysts and others on the Ford+ strategy, including key performance indicators and financial targets for each of the business segments. The company plans to report its second-quarter 2023 financial results on Thursday 27 July.