Ford Motor Co., beat first-quarter profit estimates, posting a surprisingly strong gain on higher vehicle pricing and increased sales volumes. It left its full-year outlook unchanged.

The automaker Tuesday posted adjusted earnings per share of 63 cents, far exceeding the 42 cents analysts estimated. That came in above the 38 cents it reported for the same period a year ago and 51 cents in the previous quarter.

Adjusted earnings before interest and taxes of US$3.4 billion, compared to the US$1.62 billion analysts expected, while first-quarter revenue reached US$41.5 billion, far more than the US$36.2 billion analysts expected.

For the year, Dearborn, Michigan-based Ford maintained its forecast of adjusted earnings before interest and taxes in a range of US$9 billion to US$11 billion, which it reiterated in March. Cross-town rival General Motors Co. last week boosted profit estimates for 2023 by US$500 million to a range of US$11 billion to US$13 billion. 

The unchanged outlook and concern about losses on its EVs kept a lid on investor sentiment. Ford Chief Financial Officer John Lawler said the company didn’t raise its guidance because it anticipates more pressure on pricing as industrywide sales volumes “normalize” following pandemic-related disruptions and parts shortages.

“We had a solid quarter for sure, but there’s a lot of the year in front of us,” Lawler said Tuesday in call with reporters. “The macro economic environment is opaque at best.”

Ford shares fell more than 3.5 per cent in after-market trading after reporting earnings before recovering. The stock had gained 1.5 per cent so far this year through Tuesday’s close.

For the first time, Ford reported results by business unit, rather than geography, after Chief Executive Officer Jim Farley radically restructured the 120-year-old company to increase focus on electric vehicles. The new-look balance sheet revealed Ford lost US$722 million before interest and taxes in the EV business it calls Model e, while making US$2.62 billion on its traditional gasoline-fueled models in its Ford Blue unit. It earned US$1.37 billion on commercial vehicles and services in its Ford Pro business.

EV PUSH

Ford has said it expects to lose US$3 billion on electric vehicles this year, matching the loss total from the previous two years.

Farley has a goal of achieving an 8 per cent return on electric vehicles, before interest and taxes, by the end of 2026, when it plans to be building 2 million EVs annually. He also has said he plans to overtake Tesla Inc., which controls two-thirds of the U.S. market for battery powered cars. But that all has become more complicated as Elon Musk set off a price war by slashing prices on Tesla models.

Farley is counting on Ford’s traditional combustion engine models such as F-Series pickup trucks and Bronco sport-utility vehicles to finance the US$50 billion he plans to spend through 2026 to develop and build electric vehicles. But he has criticized the company’s legacy operations for being inefficient and is targeting US$2.5 billion in cost cuts this year, including slashing thousands of jobs.

“It’s all about costs,” David Whiston, an analyst with Morningstar Inc. who rates the company the equivalent of a buy, said in an interview. “That’s why the stock has been languishing for so long.”

Ford’s EV momentum suffered a setback in the first quarter when it had to shut down production for five weeks of its F-150 Lightning plug-in pickup after one caught fire in a holding lot next to the plant in Dearborn. That, on top of the suspension of production of Mustang Mach-E to expand its Mexican factory, caused Ford to fall to the No. 5 seller of EVs in America, after finishing second to Tesla last year.

Overall, Ford’s U.S. light vehicle sales rose almost 10 per cent in the first quarter as it increased global production by 5 per cent, including a nearly 32 per cent boost in F-Series pickup production, following three years of pandemic-related parts shortages and shutdowns.

“They need a lot more EV products than just the Lightning and the Mach-E,” Whiston said. “And they need a much leaner cost base to fight Tesla.”