Ford raises guidance after Q2 beat, stock jumps 8%

Ford Motor Co. reported second-quarter adjusted EBIT of $2.5 billion, topping analyst estimates, and raised its full-year profit guidance by $1 billion on stronger pricing and product mix.

"We delivered another strong quarter and raised our full-year guidance, but the more important story is the growing evidence that Ford is becoming a more profitable, more disciplined and genuinely different company," Chief Executive Officer Jim Farley said.

Revenue fell 4 percent year over year to $48.3 billion, while adjusted earnings per share of $0.42 beat the $0.36 consensus. The automaker now expects full-year adjusted EBIT of $10 billion to $11 billion, up from $8.5 billion to $10.5 billion, and lifted its adjusted free cash flow forecast to $6 billion to $7 billion from $5 billion to $6 billion.

Shares jumped more than 8 percent in after-hours trading. The guidance raise signals management expects the second-half recovery in F-Series production, disrupted by the Novelis aluminum plant fire, to drive profit growth. Ford incurred about $800 million in Novelis-related costs in the first half and expects a full-year impact of roughly $1.5 billion.

Ford reported a net loss of $1.3 billion for the quarter, compared with a $36 million net loss a year earlier, driven by a $4.2 billion pretax special charge. Of that total, $3.6 billion was a non-cash charge tied to dissolving the BlueOval SK battery joint venture. Chief Financial Officer Sherry House said about $500 million of the charge was cash, with most remaining cash charges expected by year-end.

The company's traditional Ford Blue unit generated $1.1 billion in EBIT on $26.1 billion in revenue, a 72 percent profit surge driven by favorable mix toward higher-trim SUVs and off-road models. Off-road vehicles accounted for 25 percent of Ford's U.S. sales in the quarter, Farley said. Ford Pro, the commercial business, earned $1.7 billion on $17.8 billion in revenue, down 26 percent as the Novelis disruption curbed Super Duty production. The company expects to recover postponed fleet orders in the second half.

Ford's Model e electric vehicle unit posted a $919 million EBIT loss on $1 billion in revenue, a 31 percent improvement from a year earlier — its third consecutive quarter of year-over-year improvement. House attributed the narrowing loss to structural cost reductions, lower incentives and right-sized first-generation EV volumes.

House said the guidance increase was driven by pricing and mix, with net tariff costs expected at "better than a billion" dollars for the full year. Ford's U.S. sales fell 10.3 percent in the quarter, though excluding the end of Ford Escape and Lincoln Corsair production and a 69 percent cut in daily rental sales, volumes would have risen about 0.5 percent.

Ford ended the quarter with $22.3 billion in cash and $43.4 billion in total liquidity. The company declared a regular third-quarter dividend of $0.15 per share.

The guidance raise positions Ford to benefit from the Novelis supply recovery in the second half, with the Oakville facility expected to add capacity for up to 100,000 additional Super Duty units starting in the fourth quarter. Investors will watch the pace of F-Series production catch-up and the launch of Ford's first Universal EV platform vehicle, a roughly $30,000 pickup expected to begin customer deliveries next year.

This article is for informational purposes only and does not constitute investment advice.