Ford Earnings: Aluminum Plant Fire Masks Excellent Progress on Costs

Key Morningstar Metrics for Ford Motor

• Fair Value Estimate: $16
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of Ford Motor’s Earnings

Ford’s third-quarter adjusted diluted earnings per share of $0.45 beat the $0.36 LSEG consensus and sent the stock up over 2% in Oct. 23 after-hours trading. The firm also provided good news on cost-reduction efforts and quantified the impact of the Novelis aluminum plant fire in Oswego, NY.

Why it matters: Ford’s new 2025 adjusted EBIT guidance of $6 billion-6.5 billion includes $1.5 billion-$2 billion of lost profit from the Novelis fire but also includes a $1 billion tariff tailwind in the fourth quarter from the US government expanding the parts rebate on Oct. 17 for US-made vehicles.

• The market has been concerned about the Novelis plant fire (see our Oct. 7 note) reducing production of F-Series pickups and lucrative SUVs. Ford said it will lose 90,000-100,000 units in the fourth quarter but is adding a third shift of F-150 production to make up 50,000 units in 2026.
• Novelis’ impact across 2025-26 will be about $500 million to $1 billion lost EBIT. Excellent work on costs, such as materials and warranty, means Ford’s guidance without Novelis is on the higher end of February guidance, which did not factor in tariffs. Net 2025 tariffs costs will be $1 billion.

The bottom line: We maintain our fair value estimate for no-moat Ford. We see upside potential for our fair value estimate if Ford continues to show strong cost-cutting progress. It’s possible the company has finally reached a sustaining positive inflection point in its turnaround effort.

• The fourth quarter will see a $2 billion-$3 billion free cash flow hit from Novelis, hurting working capital, but automotive cash of $32.9 billion is a fortress, so we are not concerned. This working capital headwind should reverse in 2026 when F-Series production is unrestrained.
• Novelis said on Oct. 23 that it expects the Oswego plant to resume running in all areas by the end of 2025. Ford is sourcing aluminum from Novelis and others to be processed in the plant’s cold-rolling section, which was not damaged.