ALBAWABA - Ford's adjusted profits before interest and taxes, known as EBIT, dropped 27% year over year to $2.76 billion in the second quarter of 2024 from a $3.79 billion recorded in the same period last year, as the carmaker still troubled with warranty issues that have been ongoing for a number of years.
The American automaker surprised many shareholders by lifting its free cash flow target for the whole year while sticking to its 2024 profit prediction, even though many had expected a gain, as per CNBC. Adjusted earnings before interest and taxes, or EBIT, is expected to reach between $10 billion and $12 billion for Ford in the next year.
Following market closure, the automaker's shares had dropped by almost 11%. On Wednesday, the stock ended trading at $13.67 per share.
The Detroit carmaker said that increases in the warranty provisions it set up to cover mechanical problems with cars had an impact on its profitability. Ford CFO John Lawler said at a press conference that the expenses are associated with cars that are 2021 model year or older.
“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 Vice Chair and CFO John Lawler.
On Wednesday, Ford CEO Jim Farley informed investors that the automaker's strategy to increase profitability via the Ford+ restructuring plan is still on track, stating “Ford+ is on track, our underlying quality is improving, and Ford Pro is showing the huge upside we’ve got in all our businesses,” adding that “transparency and accountability from having separate teams focused on the needs of different customers are leading to better decisions and greater value for everyone.”
