Improvement in Key Automotive Markets, Ford Credit Contribute to Ford’s Q3, YTD Operating Results
• GAAP operating cash flow up 8 percent year-to-date; adjusted free cash flow for the same
• period increased 80 percent Automotive EBIT increased 10 percent year-to-date; EBIT from North America, Europe and
• China higher in the quarter Aggressive global rollouts of customer-centered new vehicles include ongoing renewal of
• North American lineup Company continues to expect full-year growth in 2019 adjusted free cash flow, driven by
bull; Automotive; forecasts full-year adjusted EBIT of between $6.5 billion and $7.0 billion
DEARBORN, MI - October 23, 2019: Ford Motor Company said its third-quarter 2019 performance included progress in the North America, Europe and China automotive businesses and strong results from Ford Credit. At the same time, the company took further steps in Q3 to become even more fit and customer-centered amid expected long-term industry change.
Reported revenue for the third quarter was $37.0 billion, down 2 percent from the prior year, largely as a result of currency exchange. Third-quarter net income was $425 million. A decline 2 in per-share earnings to 11 cents was primarily attributable to charges for special items associated with the company’s strategic Global Redesign. Special items in Q3 included charges related to the proposed creation of a joint venture in India with Mahindra & Mahindra. Cash flow from operating activities was $4.7 billion, down 9 percent. Unless otherwise noted, all comparisons here are year-over-year.
Adjusted free cash flow for Q3 was $207 million. Adjusted EBIT in the quarter increased 8 percent to $1.8 billion. The higher operating results were attributable to mark-to-market investment gains; improvement in the company’s businesses in North America, Europe and China; and another strong performance by Ford Credit. Adjusted per-share earnings for the third quarter were 34 cents.
For the year to date, adjusted free cash flow was up 80 percent. EBIT from Ford’s Automotive business for the first nine months of the year increased 10 percent.
“Our Global Redesign is about making choices to transform our organization, to become the world’s most trusted company and a clear leader in an era of rapid change,” said Jim Hackett, Ford president and chief executive officer. “We are getting stronger today and we have more work to do.”
Business-unit highlights during the quarter included:
• Ongoing product renewal in North America, where all-new Ford Explorer and Escape and Lincoln Aviator and Corsair models will soon be followed by a new F-Series Super Duty with best-in-class diesel towing, diesel and gas power and torque, and payload; a new F-150; an innovative, Mustang-inspired battery-electric vehicle; and the return of the Bronco.
• Opening of a new customer-contact center in Houston to develop even closer relationships with U.S. owners of Ford vehicles.
• Further strides in restructuring the company’s European business, focusing on industryleading commercial vehicles, a smaller portfolio of profitable passenger vehicles, and niche imported models.
• Signs of improvement in Ford’s China business. The company has begun introducing new country-focused products while at the same time lowering costs and strengthening its dealer network and sales and marketing capabilities.
• Formation of Ford’s International Markets Group, or IMG, a new business unit bringing together 100 high-potential mature and emerging markets under a single leadership team. Those markets include India, Australia, ASEAN, the Middle East, Africa and Russia. Auto sales in emerging countries are growing at almost double the rate of the global industry, and by 2024 will likely account for one in three vehicles sold worldwide.
Ford IMG will be a beneficiary of the new joint venture with Mahindra. The company said the JV reinforces a commitment to profitable growth in India and is expected to unlock the low-cost product development capabilities key to emerging-market growth.
• Sustained strong performance by Ford Credit, which delivered a 9-percent increase in EBT.
• Selection of Austin, Texas, as the third launch market for Ford Mobility self-driving vehicles. Additionally, Ford’s Spin, which is among the top three micro-mobility companies in the U.S., continues to grow, with more than 3 million rides across 3 now 60 markets through the first nine months of the year. Spin is expanding the company’s reach in ways that are expected to broaden the base for its future autonomous-vehicles businesses.
“We are laying the groundwork for consistently higher customer experience and future growth in free cash flow and profitability,” said Tim Stone, Ford’s chief financial officer. “We have a bias for action and are driving disciplined, long-term execution.”
• Ford continues to expect lower full-year structural costs in its Automotive business, excluding pensions and other post-employment benefits, and sustained strength in Ford Credit. The company still anticipates full-year growth in adjusted free cash flow, its most important financial measure, driven by Automotive.
• However, fourth-quarter headwinds – higher warranty costs, higher than planned incentives in North America, and lower volumes in China – have intensified since Ford last gave financial guidance for 2019.
• As a result, Ford is lowering its guidance for full-year company adjusted EBIT to between $6.5 billion and $7.0 billion, compared with $7.0 billion in 2018.
• Full-year adjusted EPS is now anticipated to be $1.20 to $1.32, versus $1.30 in 2018, with an adjusted effective tax rate of around 12 to 13 percent.
• Ford’s guidance assumes no material change in the current economic environment, including commodities, foreign exchange and tariffs. Actual results could differ materially from guidance due to risks, uncertainties and other factors, including those detailed in the company’s Cautionary Note on Forward Looking Statements.