Ford Q1 earnings rebound as vehicles and fleet gross sales drive earnings

Ford reported its first quarter 2023 earnings Tuesday after the bell, and it marks the primary time the legacy automaker will break down earnings by its three new enterprise models: Ford Blue for the long-lasting fuel and hybrid autos, Ford Mannequin e for electrical autos, and Ford Professional for industrial services. 

The automaker reported income of $41.5 billion, storming previous Wall Avenue’s expectations of $36 billion, and exhibiting a 20% enchancment over the identical interval final yr.  Regardless of Ford’s push to affect its fleet, that beat was largely pushed by industrial and gas-powered automobile gross sales. 

Ford’s web revenue on a GAAP foundation was $1.8 billion, in comparison with a $2 billion web loss within the 2022 interval as a result of a $7.3 billion write-down on the automaker’s Rivian funding. 

On an adjusted earnings foundation, Ford earned $3.4 billion, a forty five% improve from Q1 2022 and a margin of 8.1%. 

Ford’s steering for the total yr remained the identical at between $9 billion and $11 billion in adjusted earnings. The corporate expects to have an adjusted free money circulation of about $6 billion in 2023. 

By section, Ford expects 2023 to see $7 billion for Ford Blue, a slight improve from final yr; a full-year lack of about $3 billion for Mannequin e; and EBIT of about $6 billion for Professional, which might symbolize double 2022 earnings. 

Ford mentioned working money circulation for the quarter was $2.8 billion, and that it generated $693 million in adjusted free money circulation. The automaker closed out the quarter with practically $29 billion in money available. 

Breakdown of Ford’s enterprise segments

Ford continues to be taking a loss on its EV enterprise, which it usually describes as a “startup.” The unit introduced in $700 million in income, a 27% decline from final yr, partly attributable to manufacturing interruptions of two of Ford’s hottest EVs: the F-150 Lightning pickup and the Mustang Mach-E SUV. Ford mentioned manufacturing for the Mach-E was interrupted by “industrial modifications that may practically double manufacturing capability,” which maybe explains Ford’s most up-to-date value drop on the automobile.

That marks the second time Ford has reduce the value on the Mach-E this quarter. The primary time was in January and adopted related value cuts from Tesla. 

Ford goals to promote EVs at a worldwide run fee of 600,000 models by the tip of 2023 and greater than 2 million by the tip of 2026. The automaker should construct and ship rapidly if it needs to satisfy that objective. Ford solely reported 10,866 EV models bought in Q1 this yr. 

Regardless of the losses inside Mannequin e, Ford’s different two models had been greater than sufficient to push the automaker into progress territory. Ford mentioned that Ford Blue and Ford Professional enterprise segments had been each worthwhile in each area the place they function. The automaker shipped 1.1 million autos within the quarter, a rise of 9% year-over-year, with nearly all of gross sales coming from Ford’s gas-powered, hybrid and electrical vehicles, industrial vans and SUVs, based on the corporate.

For the primary quarter, Ford Blue introduced in income of $25.1 billion, up 21% YoY. On an adjusted foundation, that’s $2.6 billion. The automaker says it expects to proceed to see excessive progress on this section.

Ford Professional reported $13.2 billion, a 28% improve from final yr. In EBIT phrases, that $1.4 billion, which is 3x from 2022 stories. That progress was pushed each by gross sales of Ford’s Transit and E-Transit industrial vans, in addition to a 64% improve in paid software program subscriptions within the first quarter.  

The automaker’s Credit score earnings earlier than taxes had been $303 million, which is down from final yr as a result of a decrease financing margin, elevated credit score losses and a decline in leasing revenue, based on Ford.