10-QPeriod: Q2 FY2018

FORD MOTOR CO Quarterly Report for Q2 Ended Jun 30, 2018

Filed July 26, 2018For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company reported its financial results for the second quarter and first half of 2018, presenting a mixed performance. While total revenues showed a slight increase year-over-year for the first half of the year ($80.9 billion vs. $79.0 billion), net income attributable to Ford decreased significantly to $1.07 billion in Q2 2018 from $2.05 billion in Q2 2017. This decline was primarily driven by challenges within the Automotive segment, particularly in North America due to production disruptions from a supplier fire and performance issues in China. Despite these headwinds, the Ford Credit segment continued to perform strongly, demonstrating growth in receivables and healthy consumer credit metrics. The company ended the quarter with a solid liquidity position, reporting $16.8 billion in cash and cash equivalents, though overall cash levels were impacted by investing activities. Management expressed confidence in their liquidity and capital resources to navigate future investments and obligations.

Financial Statements
Beta
Revenue$38.92B
Cost of Revenue$33.19B
Gross Profit$5.73B
SG&A Expenses$2.78B
Operating Expenses$38.33B
Interest Expense$287.00M
Net Income$1.07B
EPS (Basic)$0.27
EPS (Diluted)$0.27
Shares Outstanding (Basic)3.98B
Shares Outstanding (Diluted)4.00B

Key Highlights

  • 1Total revenues for the first half of 2018 increased to $80.9 billion from $79.0 billion in the prior year, indicating top-line resilience.
  • 2Net income attributable to Ford Motor Company for the second quarter of 2018 significantly decreased to $1.07 billion, down from $2.05 billion in the same period last year, reflecting operational challenges.
  • 3The Automotive segment experienced an EBIT loss of $181 million in Q2 2018, heavily influenced by production disruptions in North America and significant losses in Asia Pacific, particularly China.
  • 4Ford Credit segment demonstrated continued strength with an Earnings Before Taxes (EBT) of $645 million in Q2 2018, up $26 million year-over-year, supported by growth in receivables and strong credit metrics.
  • 5Total assets remained relatively stable, standing at $258.1 billion as of June 30, 2018, compared to $258.5 billion at the end of 2017.
  • 6The company maintained a strong liquidity position with $16.8 billion in cash and cash equivalents as of June 30, 2018, although net cash decreased by $1.6 billion in the first half of the year.
  • 7Ford updated its full-year adjusted EPS guidance downwards to a range of $1.30 to $1.50, reflecting lower-than-expected contributions from Asia Pacific and Europe.

Frequently Asked Questions

The significant drop in net income was primarily due to adverse impacts on the Automotive segment. This included production disruptions in North America caused by a fire at a key supplier (Meridian facility) and performance issues in China operations, leading to lower volumes of high-margin products and reduced profitability.

The Ford Credit segment continues to perform strongly, with growth in receivables and healthy consumer credit metrics. In the second quarter of 2018, it reported an Earnings Before Taxes (EBT) of $645 million, an increase of $26 million year-over-year, contributing positively to the company's overall financial results.

Ford Motor Company maintained a solid liquidity position, with $16.8 billion in cash and cash equivalents as of June 30, 2018. While total assets remained stable, the company experienced a net decrease in cash during the first half of the year, largely due to investing activities. Management expressed confidence in their liquidity and capital resources to meet ongoing obligations and invest in future growth.

Ford has revised its full-year adjusted Earnings Per Share (EPS) guidance downwards to a range of $1.30 to $1.50. This adjustment reflects lower-than-expected contributions from the Asia Pacific and Europe regions, partially offset by stronger performance in North America and Ford Credit, as well as a slightly lower adjusted effective tax rate.