Jim Farley, CEO of Ford Motor Co. in Dearborn, says that the company’s financial results for the first quarter of 2023 show that its plan of organizing around and running the company on behalf of distinct customer groups is paying off.
“We’re bringing Ford+ to life by zeroing in on what distinct customers need and value the most,” Farley says. “Ford Pro is leading the way on profitable growth, our big investments in iconic Ford Blue vehicles and derivatives are winning with customers, and Ford Model e’s different approach to EVs is significantly reducing costs on our first high-volume products while rapidly developing breakthrough next-generation vehicles from the ground up.”
Ford’s first-quarter 2023 revenue reached $41.5 billion, up 20 percent from the same period a year ago, on shipments approaching 1.1 million vehicles, a 9 percent increase.
Customers made Ford America’s best-selling vehicle brand in the quarter, choosing its gas-powered, hybrid, electric trucks, commercial vans, and SUVs, categories in which the company has demonstrated strength and made strategic commitments.
Profitability in the quarter was enhanced by the company’s mix of products, higher net pricing, and increased volume and was broadly based geographically. The Ford Blue and Ford Pro business segments were both profitable in every region where they operate.
Net income of $1.8 billion compared to a net loss in the 2022 period that was primarily attributable to a change in the mark-to-market value of the company’s investment in Rivian. Company adjusted earnings before interest and taxes, or EBIT, were $3.4 billion, an increase of 45 percent and margin of 8.1 percent.
Cash flow from operations in the first quarter was $2.8 billion. Ford generated $693 million in adjusted free cash flow. They enabled continued strategic investments in profitable growth and returns to shareholders, including through a regular dividend payable June 1.
At the end of the quarter, the company’s strong balance sheet had nearly $29 billion in cash and more than $46 billion in liquidity. In addition, Ford recently completed the renewal of its more than $17 billion in sustainability-linked corporate credit facilities.
Ford Blue, which has high expectations for profitable growth from its portfolio of gas-powered and hybrid vehicles, had first-quarter revenue of $25.1 billion, EBIT of $2.6 billion and an EBIT margin of 10.4 percent, all up sharply from a year ago.
Ford Model e, which operates like a startup, is developing new electric vehicles along with digital capabilities for deployment across the company’s entire product line. Quarterly shipments of and revenue from EVs were limited by production interruptions of two vehicles: the Mustang Mach-E SUV, to make industrial changes that will nearly double manufacturing capacity; and the F-150 Lightning pickup, to isolate and address a battery issue before it became a problem for customers.
In March, Ford introduced the new all-electric Explorer crossover that will be built and sold in Europe – another step toward making and selling EVs at a global run rate of 600,000 units by the end of 2023 and more than 2 million by the end of 2026.
Disciplined capital investments are boosting capacity of EVs like the Mustang Mach-E,
F-150 Lightning, and E-Transit, according to Ford. Additionally, Ford Model e will manufacture its next-generation electric pickup at the BlueOval City mega-campus now being built in Stanton, Tenn. The company is also transforming an existing operation in Oakville, Ont., Canada, to produce batteries and next-generation EVs as well as building and staffing an LFP battery plant in Marshall.
Ford also reported that Ford Pro, which helps commercial customers with their enterprises with tailored gas, hybrid, and electric vehicles and high-value services, posted 18 percent growth in wholesales; 28 percent higher revenue, to $13.2 billion; EBIT of $1.4 billion, nearly three times the 2022 level; and an EBIT margin of 10.3 percent.
The foundation for Ford Pro’s growth ambitions is made up of market leadership, scale, and customer knowledge. Ford’s Transit and E-Transit together remain the top commercial van in both North America and Europe. Nine of the vehicles it sells, including Transit, E-Transit and Super Duty pickups — more than from any automaker — recently earned “Vincentric Best Fleet Value in America” awards.
Ford Pro also is creating an ecosystem of software, services, and EV charging. Paid software subscriptions increased 64 percent year-over-year in the first quarter and higher-revenue services were also up. The numbers of mobile repair orders from commercial customers and vans now on the road delivering related services to them both more than doubled from a year ago.
Ford Credit’s earnings before taxes of $303 million were down compared to last year because of a lower financing margin, increased credit losses, and a decline in leasing income. The company’s credit-loss performance remains strong, but below its historical average. It is now trending upward toward more normal levels. Likewise, auction values are also still strong, though down from their peak in the first half of 2022.
Ford is maintaining the full-year 2023 performance expectations that the company first articulated in early February: for adjusted EBIT of $9 billion to $11 billion and adjusted free cash flow of about $6 billion.
Additionally, the company reaffirmed 2023 segment-level EBIT expectations: about
$7 billion for Ford Blue, up modestly from last year; a full-year loss of about $3 billion for
Ford Model e; and EBIT approaching $6 billion for Ford Pro, which would be nearly twice its 2022 earnings.
But outside factors could affect these expectations, Ford says. They include negative factors such as economic uncertainty around the globe; higher industrywide customer incentives, as vehicle supply-and-demand rebalances; a lower profit from Ford Credit; lower past service pension income; exchange rates; and growth-related investments, e.g., in customer experience, connected services, and capital expenditures.
Expectations also could be affected by positive factors such as supply chain improvements and higher industry volumes; launch of the all-new Super Duty truck; and lower costs of goods sold, including for materials and commodities, according to the automaker.
