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(Bloomberg) — Ford Motor Co. posted second-quarter profit that fell short of Wall Street estimates, saying quality problems with new vehicles led to a surge in warranty costs.
The automaker Wednesday reported adjusted earnings of 47 cents a share, missing the 67 cents that analysts expected on average. Second-quarter revenue rose 6.2% to $47.8 billion.
“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,” Chief Financial Officer John Lawler said in a statement.
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Ford’s warranty costs rose $800 million from the first quarter, Lawler told reporters on a call. He blamed the quality problems on models built in 2021 and earlier.
“That was a one time in the quarter,” Lawler said. “We can’t read this quarter as the year is coming off track — it’s not.”
Ford has struggled to fix stubborn quality problems, which have driven up warranty costs and put the company at a significant disadvantage to rivals, Chief Executive Officer Jim Farley has said.
Last year, Ford spent $4.8 billion fixing customers’ cars. Early this year, the automaker held some 60,000 redesigned F-150 pickup trucks in lots around Detroit for extra quality checks. Farley said that helped the company avoid 12 recalls and said that would be the process going forward for all new models.
“What we’re going to see long term is fewer recalls and lower warranty costs because of this new process,” Farley said in April.
Ford reiterated its earnings outlook for the year, forecasting profit of $10 billion to $12 billion before interest and taxes. But that includes lower guidance for Ford Blue, the unit that makes gas-powered vehicles and hybrids, due to the quality woes. General Motors Co. Tuesday boosted its profit guidance for the year by $500 million to as much as $15 billion.
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Ford has been ramping up production of traditional internal-combustion engine models, including a redesigned version of its top-selling F-150 pickup truck, as mainstream buyers turn away from EVs due to high prices and a spotty charging infrastructure.
Last week, Ford said it will begin building its big Super Duty pickups at a plant in Ontario, Canada, that had previously been slated to produce an electric sport-utility vehicle that the company has delayed by two years. Farley has said Ford’s EV unit, which it projects will lose as much as $5.5 billion this year.
Shares of Ford fell as much as 13% to $11.91 in extended trading after the results were announced.
As Ford has boosted production of money makers like the beefy Bronco SUV, investors had warmed to the stock, driving up shares 18% since mid-June by the close Tuesday. For the year, Ford was up 13%.
(Updates with details on Ford quality starting in fourth paragraph)
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