Ford's Q3 Results: Performance Exceeding Expectations!

Ford Motor Company (F) announced its third-quarter results, which exceeded market expectations. However, due to the negative impacts of the fire at the Novelis aluminum plant on Ford's F-150 trucks and SUVs, the company expects to incur losses in costs.

Ford indicated that the fire at the Novelis aluminum plant in New York would have a negative impact of between $1.5 billion and $2.0 billion on adjusted EBIT for 2025. This situation will also affect annual cash flow, but the company expects to recover at least $1 billion in adjusted EBIT losses by 2026. It was stated that the entire cost stemming from the Novelis plant would be borne by Ford in the fourth quarter.

Ford forecasts that the negative impact from Novelis will be $1 billion or less for 2025 and 2026. For this reason, the company has downwardly revised its full-year forecasts, setting the adjusted EBIT estimate between $6 billion and $6.5 billion (previous estimate was between $6.5 billion and $7.5 billion). It also stated that the adjusted free cash flow is expected to be between $2 billion and $3 billion (previous estimate was between $3.5 billion and $4.5 billion).

Ford emphasized that production disruptions have had an "extreme short-term effect on working capital" but that this would reverse next year. Additionally, it was noted that almost $9 billion in capital expenditures remain unchanged.

Ford shares rose nearly 9% in early trading on Friday after the Wall Street Journal reported that Novelis would reopen its plant later this year. Ford CFO Sherry House stated that, without the Novelis fire, they would have raised their full-year forecasts and predicted that this year's EBIT would “exceed $8 billion.” Ford's Chief Operating Officer Kumar Galhotra indicated that there would be “disruptions” in F-150 production in the coming weeks.

At the same time, Ford announced plans to increase production of F-150 and F-Series Super Duty trucks by over 50,000 units in 2026. This new plan aims to compensate for the production losses caused by the Novelis fire. However, production of Ford's electric F-150 Lightning trucks will continue to be paused to prioritize gasoline and hybrid truck production.

Bank of America analyst Federico Merendi found Ford's updates positive and raised the bank's price target to $14.50 (up from $13.50). Merendi noted, “Positively, Ford expects to recover about half of the EBIT lost in Q4 2025 (around $750 million - $1 billion) in 2026.” He pointed out that the adjusted EBIT estimates for 2026 would be in the range of $8.5 billion to $10.5 billion.

In the third quarter, Ford reported automotive revenue of $47.185 billion, surpassing the Bloomberg consensus estimate of $43.70 billion. Adjusted EPS (earnings per share) was $0.45, while the expected value was $0.36, and adjusted EBIT reached $2.6 billion, exceeding the expected $2.02 billion.

Ford is also contending with the impacts of automotive tariffs imposed by President Donald Trump. These tariffs incurred a cost of $700 million in the third quarter, while the net effect for the year was reported to be $1 billion. With the implementation of new automotive tax MSRP offsets, the losses for Ford and other domestic automakers will be reduced.

The government has extended the timeframe for automakers to offset tax costs against the full value of vehicles assembled in the U.S. Ford’s production of 80% of its vehicles in the U.S. will benefit from this situation. Additionally, it will benefit from tariffs applied to medium and heavy-duty trucks.

Ford has divided its business into three units under the Ford+ plan: Ford Blue for traditional gasoline business, Ford Model e for the electric vehicle segment, and Ford Pro for commercial and super heavy-duty trucks. According to Bloomberg, Ford’s expected revenues are as follows: Ford Blue: $28 billion in revenue, $1.54 billion EBIT; Model e: $1.8 billion in revenue, -$1.41 billion EBIT; Ford Pro: $17.4 billion in revenue, $1.985 billion EBIT.

Despite some issues with tariffs, Ford's sales increased by 8.2% in the third quarter, with this growth driven by its trucks and electric vehicles. Ford achieved total sales of 545,522 vehicles. Sales of trucks such as the F-Series, Ranger, and Maverick increased, with van sales also up 7.4% to reach 313,654 units. F-Series truck sales rose by 13% year-to-date.

Ford recorded its highest quarterly sales of electric vehicles. Buyers rushed to purchase electric Mustang Mach-E SUVs and F-150 Lightning trucks before the expiration of federal electric vehicle tax credits. September marked the seventh consecutive month of growth for the Dearborn, Michigan-based automaker.