Q4 2024 Earnings Summary
- Ford Pro is expanding its high-margin services business, aiming to increase profitability from services from 13% to 20%, while leveraging a fresh product lineup to drive growth.
- Ford remains confident in its EV strategy, focusing on making affordable and differentiated EVs that play to its strengths, especially in commercial vehicles, regardless of potential policy changes.
- Ford is committed to a 'nonnegotiable' cost transformation, investing in affordable vehicles and diverse powertrains, while focusing on recurring revenue streams through its Ford Pro services.
- Ford expects adjusted EBIT in the first quarter of 2025 to be roughly breakeven, a significant decline due to a 20% reduction in wholesales from launch activities and unfavorable mix, indicating operational challenges.
- Pricing pressures in key segments like Ford Pro are anticipated, especially in fleet sales and daily rentals, which could erode margins and profitability. The introduction of EVs into Pro is also hampering profitability.
- Ford projects continued substantial losses in its Model e division, with an expected loss of $5 billion to $5.5 billion in 2025, due to increased investment in battery facilities and next-generation products, alongside ongoing industry pricing pressures.
Metric | YoY Change | Reason |
---|---|---|
Total Revenue | +5% to $48.211B | Strong truck and commercial vehicle demand and improving supply chains boosted revenue, while competitive EV pricing tempered gains. Continued focus on cost efficiencies also supported top-line growth. |
Operating Income | Improved from - $245M to $2.023B | Higher net pricing, particularly for key truck models, combined with cost optimization efforts, drove operating income growth. Market stability and lower commodity pressures further supported margins. |
Net Income | From - $523M to $1.816B | The swing to positive net income reflects reduced special charges and a healthier operating environment, aided by favorable pricing in core segments. Forward-looking implications include maintaining pricing discipline in the face of EV competition. |
EPS (Diluted) | From - $0.13 to $0.46 | The EPS increase followed improved profitability across internal combustion and commercial segments, as well as lower one-time charges. Ongoing cost improvements will remain key to sustaining EPS gains. |
Ford Blue | +61% to $58.974B | Growth was led by robust demand for F-Series trucks and other core gasoline models, plus favorable pricing. Ford Blue’s momentum suggests further investment in successful, high-margin segments while defending market share against new entrants. |
Ford Model e | -9% to $1.651B | Competitive EV pricing and moderating wholesale volumes drove the revenue decline. Continued battery cost reductions and new model introductions aim to improve Model e’s competitiveness despite market headwinds. |
Ford Pro | +6% to $16.244B | Gains came from commercial fleet demand, higher software subscription traction, and strong Transit and Super Duty sales. As more businesses prioritize fleet electrification, Ford Pro’s recurring revenue from software and services is expected to rise further. |
Ford Next | +100% to $2M | The higher revenue stems from new business incubations and reduced spending on legacy initiatives. Continued strategic pivots toward vehicle-adjacent services may further diversify Ford’s revenue streams in future periods. |
Ford Credit | +19% to $3.275B | Higher financing margin and growing receivables lifted Ford Credit revenue, although rising credit losses slightly offset the gains. Looking ahead, credit performance will hinge on economic conditions and used-vehicle residual values. |
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Full-Year Adjusted EBIT | FY 2024 | no prior guidance | about $10 billion | no prior guidance |
Adjusted Free Cash Flow | FY 2024 | no prior guidance | $7.5 – $8.5 billion | no prior guidance |
Capital Expenditures | FY 2024 | no prior guidance | $8 – $8.5 billion | no prior guidance |
Ford Pro EBITDA | FY 2024 | no prior guidance | about $9 billion | no prior guidance |
Ford Model e Loss | FY 2024 | no prior guidance | about $5 billion | no prior guidance |
Ford Blue EBIT | FY 2024 | no prior guidance | $5 billion | no prior guidance |
Ford Credit EBT | FY 2024 | no prior guidance | about $1.6 billion | no prior guidance |
SAAR | FY 2024 | no prior guidance | 16.0 – 16.5 million units | no prior guidance |
Adjusted EBIT | FY 2025 | no prior guidance | $7 – $8.5 billion | no prior guidance |
Adjusted Free Cash Flow | FY 2025 | no prior guidance | $3.5 – $4.5 billion | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | $8 – $9 billion | no prior guidance |
Ford Pro EBIT | FY 2025 | no prior guidance | $7.5 – $8 billion | no prior guidance |
Ford Model e Loss | FY 2025 | no prior guidance | $5 – $5.5 billion | no prior guidance |
Ford Blue EBIT | FY 2025 | no prior guidance | $3.5 – $4 billion | no prior guidance |
First Quarter Adjusted EBIT | Q1 2025 | no prior guidance | roughly breakeven | no prior guidance |
Cost Reductions | FY 2025 | no prior guidance | $1 billion net cost reductions | no prior guidance |
Industry Pricing | FY 2025 | no prior guidance | 2% decline | no prior guidance |
Metric | Period | Guidance | Actual | Performance |
---|---|---|---|---|
Adjusted EBIT | FY 2024 | About $10 billion | Approximately $5.2 billion from the sum of quarterly Operating Income: Q1 2024: $1,225M, Q2 2024: $1,883M, Q3 2024: $88M, Q4 2024: $2,023M | Missed |
Capital Expenditures | FY 2024 | $8.0–$8.5 billion | Approximately $10.76 billion from the sum of Q1 2024: $2,094M, Q2 2024: $2,100M, Q3 2024: $1,992M, Q4 2024: $4,577M | Missed |
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Ford Pro’s consistent performance and profitability focus, including high-margin services and parts | Emphasized in Q1 and Q2 2024 with strong revenue growth (up to 36%) and high-margin parts/services driving EBIT of $2.6B–$3B | Continues in Q4 2024 with services contributing 13% of EBIT, targeting 20% as recurring revenue grows | Consistently highlighted; services and parts remain central to profitability |
Recurrent emphasis on EV strategy (Model e), with significant investments, losses, and cost-reduction efforts | Q1 and Q2 2024 saw losses of $1.1B–$1.3B each quarter, aiming for $5B–$5.5B annual loss while pursuing cost cuts | Q4 2024 projects similar $5B–$5.5B losses for 2025, achieving $1.4B in cost reductions and investing in next-gen EV products | Major investment priority with persistent losses offset by intensified cost focus |
Ongoing cost transformation initiatives aimed at improved capital efficiency and recurring revenue streams | Q1 and Q2 2024 targeted $2B in cost reductions, leveraging software services for high-margin recurring revenue | Q4 2024 achieved $500M in net cuts, aiming for $1B in 2025; Ford Pro software subscriptions rose 27% | Accelerating cost cuts while scaling high-margin software and services |
Evolving sentiment on pricing power, especially in fleet and daily rentals, reflecting growing caution over margins | Q1 2024 noted general industry price pressure but not fleet-specific | Q4 2024 sees softening fleet pricing, though volumes remain neutral and EV introduction slightly hampers margins | Shift from optimism to caution in fleet/daily rentals pricing |
Concerns about near-term EBIT softness tied to launch activities, production challenges, and unfavorable mix | Q1 2024 acknowledged push of 60K F-150 units and "lumpiness" due to more careful launches | Q4 2024 warns Q1 2025 EBIT could be near breakeven, citing launch impacts, volume cuts, and mix challenges | Heightening caution over short-term profitability due to major launches |
Emergence of Skunkworks and strategic battery partnerships (e.g., CATL) as new approaches to EV development and cost management | Not detailed in Q1 2024 | Q4 2024 highlights Skunkworks for affordable EVs, BOSK battery JV launching 2025 for cost savings via tax credits | Growing emphasis on specialized R&D and vertical battery integration |
Topics no longer highlighted include the Maverick pickup mentioned prominently in Q1 but absent in later calls | Q1 2024 showcased Maverick’s strong demand and supply constraints | No mention in Q4 2024 [—] | Phased out despite earlier high demand |
Future impact hinges on Ford Pro expansions, EV investments, battery facility developments, and recurring services revenue | Q1 and Q2 2024 feature Pro’s growth, retimed EV launches, expanding software services | Q4 2024 focuses on scaling Ford Pro software mix, launching new battery JV, and increasing recurring revenue | Consistent strategic pillar as Ford intensifies recurring revenue and EV investments |
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Cost Savings Plan
Q: How will you achieve $1B cost savings this year?
A: We have confidence in delivering a $1 billion net cost improvement this year by taking a granular approach to efficiency across all areas of our business, particularly focusing on material costs and warranty expenses. We've identified and scheduled cost savings from product design changes, with 90% of our pipeline filled, giving visibility into when these savings will be realized. This is why benefits are back-end loaded in the year. -
Pricing Pressure & Inventory
Q: How are you managing pricing pressure with high pickup inventories?
A: Although there's nearly 100 days supply of pickups industry-wide, we're mitigating pricing pressure by introducing new models like the model year '25 vehicles and new launches of Navigator, Expedition, and F-150, which naturally support transaction pricing. We're also focusing on inventory discipline, planning to reduce dealer supplies below 60 days, to protect pricing and brand value. We acknowledge pricing pressure in fleet segments, particularly rentals. -
Ford Pro Profitability
Q: Can Ford Pro sustain or grow EBIT amid headwinds?
A: Despite softening pricing in fleet markets and increased EV introduction affecting profitability slightly, we're optimistic about Ford Pro. In Q4, 13% of Pro's profitability came from services; we aim to grow this to 20%. Our fresh product lineup, including new F-Series and Super Duty, supports vehicle sales, while higher-margin services and software (with margins of 35–60%) provide an opportunity to de-risk our profile. -
Tariffs Impact
Q: What is the impact of potential sustained tariffs?
A: Short-term tariffs (weeks) are manageable. In the longer term, with over 80% of our vehicles made in the U.S., we'd face challenges as our U.S. plants are already at capacity. Sustained tariffs would necessitate major strategic shifts and could have a devastating impact. We question policy inconsistencies, as competitors import large volumes without incremental tariffs. -
EV Strategy Amid Policy Changes
Q: How will policy shifts affect your EV plans?
A: Despite potential policy changes reducing EV mandates, we're confident in our EV strategy. EVs represent 8% of the U.S. industry and are growing, with higher customer satisfaction. The potential removal of mandates makes our skunkworks platform even more important, as affordability becomes key. We remain committed to EVs, adjusting as needed but focusing on profitable, non-me-too products. -
Autonomy and AI Strategy
Q: What's your plan for autonomy and AI strategy?
A: With Level 3 autonomy on the horizon and BlueCruise accumulating over 300 million miles, our internal capabilities are strong. Former Argo teams are developing Level 2 and Level 3 systems. We're considering whether to continue internally or to partner for Level 4 personal autonomy, getting closer to a partnering decision. -
Multi Powertrain Strategy (EREVs)
Q: How will you position EREVs to consumers?
A: EREVs offer an electric experience without range anxiety, appealing to customers who view them as EVs. With 95% of miles driven electrically and smaller batteries (around 150-mile range), they are more affordable than full EVs with large batteries. This technology meets consumer desires for electric driving in big vehicles, without the high cost. -
Flat Model e Guidance
Q: Why is Model e guidance flat despite improvements?
A: While we're increasing volumes and seeing improvements, Gen 1 products are still not profitable. Additional $1 billion in costs for our BOSK battery factory and Gen 2 products are impacting results. Downward pricing pressure in Europe and North America also offsets gains. However, Model e's Mach-E sales increased over 30% quarter-over-quarter, maintaining above-average transaction prices. -
Free Cash Flow Guidance
Q: What are drivers behind free cash flow guidance?
A: Free cash flow is guided at 50% to 60% of EBIT, aligning with our target. The reduction reflects lower EBIT and expected increases in working capital due to destocking. Timing differences related to warranty and marketing incentives also impact free cash flow. -
Strategic Principles Amid Uncertainty
Q: What guiding principles remain amid high uncertainty?
A: Our non-negotiable focus is on cost reduction while improving quality. We're investing in affordable vehicles profitably, which requires transforming our platforms. We emphasize diverse powertrains, including hybrids and EREVs, to meet customer needs. Growing recurring revenue through Ford Pro services is strategic. Finally, we prioritize attracting the best talent and fostering a culture where quality and cost are paramount. -
Chinese EV Competition
Q: Will U.S. tariffs keep Chinese EVs out long-term?
A: Tariff policies must address subsidies and data privacy concerns with Chinese EVs, which are essentially data collection devices. Ultimately, we must compete directly with these companies on cost and product appeal. It's management's responsibility to stand toe-to-toe with them. -
Wholesales Decline & Inventory
Q: What's your confidence in recovery after wholesales decline?
A: Our wholesales were down nearly 20% quarter-over-quarter due to launches. We're reducing inventory by about 40,000 units in Q1 and planning further reductions in Q2. We expect dealer day supply to reach the mid-50% range, positioning us well.
Research analysts covering FORD MOTOR.