December 4, 2022

Ford surprises Wall Street with Q2 profits, sees chip supply ‘improving’

Ford Motor Company announced a surprising quarterly profit late Wednesday, allowing it to avoid discounting “strong” demand for its vehicles and saying there were “signs of improvement” in chip distribution.

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In the second quarter, it earned $ 1.1 billion, or 28 cents a share, compared to $ 600 million, or 14 cents a share. Ford, which once adjusted for goods, received a share of 13 cents.

Sales were up 38% to $ 26.8 billion from $ 19.4 billion a year earlier, with vehicle revenue up 45% to $ 24.1 billion and $ 1.3 billion higher than consensus.

Analysts who voted for Foxet expect Ford to report a 3 cent adjusted loss on a share of $ 23 billion in sales. The stock rose nearly 4% in Wednesday’s extended session, taking steam as the conference call progressed.

“Despite the many reversals from semiconductor shortages, some of them are unique to Ford, and our team managed our business efficiently,” CEO Jim Barley said in a conference call with investors. “I can tell you that this effect is not certain at the beginning of the quarter.”

Barley said Ford was seeing “signs of improvement in the flow of chips” in the current quarter, but the situation was “fluid”, especially since one of its key suppliers, Renault Electronics, was late.

The automaker guided us to a better 2021 operating results, upgrading its “strong” order book and semiconductor supplies.

Ford “has a very positive momentum around any automaker’s new vehicle portfolio, and we are positive about its operational change under Barley, which came to power in October,” said CFRA analyst Garrett Nelson.

However, Ford expects that this will include rising product prices, higher warranty costs and about $ 1.5 billion in costs related to the company’s current presence for EVs and autonomous driving systems, as well as new vehicle launch costs.

The all-electric version of its iconic F150 pickup truck has more than 120,000 bookings since its May release, three-quarters of which Ford said were available from new customers. Pickup is expected to go on sale next year.

“Balancing the need to build and sell models that can be produced today with the models needed in the next five years is a challenge facing every global automaker. Recent numbers suggest that Ford is facing this challenge,” said Carl Brower, analyst at

Ford also said the dealer would focus on converting the building-order to an “order bank” structure, rather than having too much inventory on a lot of goods. The company said the benefits of relying heavily on bookings include reducing dealer costs and promotions.

When asked what this means for thousands of dealers scattered across the United States, Ford executives said their message for the network was that they “need to work together carefully” because dealers rely on the Ford and customer network, as well as the dealership network for public services.

As the chip shortage worsens in April, Ford warns investors that its production will be 50% successful, This would have caused a quarterly loss.

“In fact, Ford did better than expected, boosting strong demand for revenue and profits through a positive combination of lower incentives and vehicles, which generated adjusted revenue at the institutional level before interest and taxes of up to $ 1.1 billion,” the automaker said.

Related: Why buying a car will be harder and more expensive by the end of the year

In May, Ford announced plans to invest in and supply more electric vehicles in the coming years, with Wall Street receiving accolades. A “consistent strategy” to stay competitive in the midst of a broader industrial transition from gas-powered vehicles.

The stock has risen about 56% this year, compared to the S&P 500 Index gains about 17% for SPX.