Ford Motor Company (NYSE: F)

Ford’s Q1 2025 revenue declined 5% year-over-year to $40.7 billion, primarily due to a reduction in wholesales stemming from planned shutdowns in certain plants related to new product launches and inventory rebalancing measures. Wholesale units decreased 7% to 971,000 from 1,045,000 in the same period last year.

Net income decreased significantly to $471 million from $1.3 billion in Q1 2024, representing a 64% decline. Diluted earnings per share fell to $0.12 from $0.33 in the prior year. The company’s adjusted EBIT, a key metric for operational performance, declined 61% to $1.0 billion, with the adjusted EBIT margin contracting 4.0 percentage points to 2.5%.

Despite the challenges in profitability, Ford delivered strong operating cash flow of $3.7 billion, a significant improvement from $1.4 billion in Q1 2024. However, adjusted free cash flow was a use of $1.5 billion, compared to a use of $0.5 billion in the prior year period. The company’s adjusted return on invested capital (ROIC) for the trailing four quarters decreased 1.8 percentage points to 10.9%.

The company highlighted that improvements in cost and quality favorably contributed to performance in the quarter, marking the third straight quarter of year-over-year cost improvement, excluding the impact of tariffs. These operational improvements helped to partially offset the negative impacts of lower volumes and pricing pressures.

Ford Credit reported first-quarter earnings before taxes (EBT) of $580 million, a significant improvement compared to $326 million in Q1 2024. This strong performance in the financing arm helped to partially mitigate the challenges in the automotive segments. During the quarter, Ford Credit paid a $200 million distribution to its parent company.

Ford Pro remained the strongest performer among Ford’s automotive segments, generating $1.3 billion in EBIT with a margin of 8.6% on $15.2 billion in revenue. The EBIT decline of 56% from a year ago primarily reflects a 14% decline in wholesales due to planned downtime and unfavorable fleet pricing. Despite these challenges, Ford Pro ended the first quarter with 675,000 paid subscriptions, up 4% sequentially, highlighting the segment’s success in building recurring revenue streams. CEO Jim Farley noted that Ford Pro, described as the company’s “largest competitive advantage,” is off to a strong start to the year, gaining market share in the most profitable U.S. and European customer segments.

Ford Blue reported $96 million in EBIT, down 89% from $901 million in Q1 2024. Segment revenue declined 3% to $21 billion. The significant drop in EBIT was due to expected volume decline and adverse exchange rates. Despite these challenges, Ford Blue’s iconic nameplates such as F-Series and Bronco continue to lead their respective segments, providing the company with strong brand equity in traditional internal combustion engine vehicles.

Ford Model e reported a first-quarter EBIT loss of $849 million, an improvement of 36% from a loss of $1.3 billion in the prior year. The segment’s revenue increased dramatically by 967% to $1.2 billion, reflecting growing sales volumes with wholesales increasing from 10,000 to 31,000 units (213% increase). The segment remains focused on improving gross margins and exercising a disciplined approach to investments in battery facilities and next-generation products. U.S. retail sales grew 15% compared to a year ago as the Ford Power Promise campaign gave more customers access to home chargers and standard installation.

Ford Credit delivered strong results with earnings before taxes of $580 million, up 78% from $326 million in Q1 2024. This performance was driven by higher financing revenue, which increased to $3.3 billion from $3.0 billion in the prior year, reflecting higher interest rates and growth in the portfolio. The significant improvement in Ford Credit’s profitability provided an important offset to the challenges in the automotive segments.

Ford maintains a strong financial position, providing flexibility to navigate industry challenges while continuing to invest in growth opportunities:

• Cash and Marketable Securities: $27 billion in cash and cash equivalents at the end of Q1 2025, down from $22.9 billion at the end of 2024
• Total Liquidity: $45 billion in total liquidity, providing significant financial flexibility
• Operating Cash Flow: $3.7 billion in Q1 2025, up from $1.4 billion in Q1 2024
• Adjusted Free Cash Flow: Use of $1.5 billion in Q1 2025, compared to a use of $0.5 billion in Q1 2024
• Total Assets: $284.5 billion at the end of Q1 2025, compared to $285.2 billion at the end of 2024
• Total Debt: $155.3 billion, including $134.3 billion for Ford Credit and $20.9 billion for the automotive business
• Equity: $44.7 billion in total equity, relatively stable compared to $44.9 billion at the end of 2024

In April, Ford successfully renewed its $18 billion corporate credit facilities for another year, further strengthening its liquidity position. The company’s disciplined approach to capital allocation is reflected in CFO Sherry House’s statement: “Ford+ is creating a more efficient and durable company including a disciplined approach to capital allocation. Our strong balance sheet, with $27 billion in cash and $45 billion in liquidity, provides flexibility to continue to invest in profitable growth while managing current industry dynamics.”

Ford’s inventory levels increased to $17.9 billion at the end of Q1 2025 from $15.0 billion at the end of 2024, reflecting the company’s production planning and inventory rebalancing efforts. Net property stood at $42.5 billion, up slightly from $41.9 billion at the end of 2024, indicating continued investment in manufacturing capabilities and facilities.

The company’s strong balance sheet provides it with the financial flexibility to weather near-term challenges, including potential tariff impacts and industry uncertainties, while continuing to invest in strategic initiatives such as electrification, connectivity, and autonomous driving technologies.

Ford’s outlook for 2025 has been significantly impacted by tariff-related uncertainties, leading the company to suspend its financial guidance:

Tariff Impact

• Estimated Impact: Ford estimates a tariff-related net adverse adjusted EBIT impact of about $1.5 billion for full-year 2025, subject to ongoing tariff-related policy developments
• Underlying Business: The company noted that its underlying business is strong – tracking within the previous adjusted EBIT guidance range of $7 billion to $8.5 billion, excluding new tariff-related impacts
• Industry Risks: Ford highlighted potential for industrywide supply chain disruption impacting production, potential for future or increased tariffs in the U.S., changes in implementation of tariffs including tariff offsets, retaliatory tariffs, and other restrictions by other governments

Guidance Suspension

Due to the material near-term risks associated with tariffs and related policy uncertainties, Ford has suspended its financial guidance for 2025, including:

• Full-year adjusted EBIT guidance
• Adjusted free cash flow guidance

The company cited “substantial industry risks, which could have significant impacts on financial results, and that make updating full year guidance challenging right now given the potential range of outcomes.” Ford plans to provide an update during its Q2 earnings call.

Strategic Focus

Despite the near-term uncertainties, Ford continues to focus on strengthening its underlying business through:

• Cost and quality improvements, with the company reporting its third straight quarter of year-over-year cost improvement, excluding the impact of tariffs
• Ford Pro segment growth, which continues to gain market share in the most profitable U.S. and European customer segments
• Disciplined approach to capital allocation, leveraging the company’s strong balance sheet to invest in profitable growth while managing current industry dynamics
• Improving performance in the Model e segment, with a focus on enhancing gross margins and taking a disciplined approach to investments in battery facilities and next-generation products