Ford Motor avoided some of the pain and loss by doing so Rival General Motors experienced in the second quarter.
Ford on Wednesday reported revenue of $40.2 billion, up 50% from the same period last year, and adjusted operating income that tripled to $3.7 billion. Those numbers that absolutely crushed Wall Street Expectations, sent shares up as much as 6% in after-hours trading. Shares have since settled and are up 5.18%.
Analysts polled by Yahoo Finance expected Ford to post sales of $34.78 billion and earnings per share to average $0.45. Ford reported adjusted earnings per share of $0.68 for the second quarter, compared to $0.12 for the second quarter of 2021.
That’s pretty much the turn of Ford’s first quarter results when it reported a $3.1 billion net loss largely due to the valuation loss of its stake in EV startup Rivian. And it stands out from rival General Motors, a reported on Tuesday 40% profit drop in the second quarter.
The entire automotive industry is struggling with supply chain disruptions that have led to production bottlenecks and consequently reduced sales. Ford also saw supply chain constraints drive losses at its China business. However, these losses were offset by sales growth in North America and Europe.
In the US, second-quarter sales rose 1.8% year over year. SUVs and crossovers were the big winners with an 8% annual sales increase. This lifted Ford’s second-quarter net income to $667 million from the $561 million reported in the same quarter of 2021.
Internationally, Ford said it continued to be sustainably profitable as a result of previous restructuring efforts. According to Ford Chief Financial Officer John Lawler, sales in Europe were strong, up 22% to 222,000 vehicles, which helped offset the adverse impact of supply chain disruptions caused by the Russian war. This allowed Ford to make a modest profit in Europe.
Ford’s wholesale deliveries in China fell 24% this quarter to about 114,000 vehicles.
“In the China we Posted a Loss how the local Business and automobile Industry was significant disturbed through Pandemic tied together restrictions and Lockdowns,” Lawler said. “Now, Lincoln continues to be a benefit pillar to the the Region, extraction Split in the quarter a long With commercially Vehicles.”
Ford reiterated its guidance for full-year 2022 results, expecting adjusted EBIT to be between $11.5 billion and $12.5 billion, which would represent a 15% to 20% increase year over year. Ford hopes to end the year with $5.5 billion to $6.5 billion in cash.
Ford CEO Jim Farley said during Wednesday’s conference call that he expects the company to produce 14,000 electric vehicles worldwide this month, 600,000 next year and 2 million by 2026.
Despite expectations of rising sales, Ford warned that earnings would take a hit from inflation and higher prices for key commodities and transportation.
EV supply chain
To avoid the same headaches that have emerged during the COVID-19 pandemic, Farley highlighted the company’s work to strengthen its supply chain, particularly around electric vehicles.
Farley said Ford was quick to tap into the available offering for OEMs and is also diversifying its battery chemistries.
Last week, Ford announced plans to use lithium iron phosphate batteries, which are considered cheaper cell chemistry, for some of its electric vehicles. The car manufacturer too said it was 100% secured of battery deliveries to deliver 600,000 electric vehicles per year by the end of 2023.
That doesn’t mean Ford is immune to global supply chain issues that may develop in the future, particularly in Europe. Farley addressed the impending energy crisis in Europe and identified 550 active suppliers in high-risk countries such as the Czech Republic, Germany and Slovakia.
“We think the the risk is in between now and center ‘23 when you can administer through the energy problems,” Farley said. “We to have around 130 Offerer to the our north America vehicle production in the 550 list, and we now to have a 30-Day buffer Warehouse. So we are do all we can With the things we knows.”
Farley also noted that Ford’s suppliers have been struggling with labor shortages and costs have risen as a result, but Ford is well positioned to cope with the foreseeable costs.
Changes to the dealer model
One of the ways Ford is positioning itself to cut costs is by making changes to its dealership model.
Ford appears to be empowering dealerships to drive more EV sales by absorbing some of the cost of selling. However, Ford is also moving to a low-stock model — a direct-sales model, where a customer can order a vehicle online and have it delivered right to them a month later.
Whether a customer is at a dealership or “in their rabbit slippers,” Farley said Ford will ensure a smoother e-commerce experience. The CEO also said Ford will invest in a post-sales marketing model.
“So what I see is that dealer margins are still very competitive, but they’re going to shift the composition of those margins going forward,” Farley said.
Future reporting structure
As announced by Ford in March, the automaker intends to begin operations and report financial results through its three new business segments, rather than just a combined automotive segment: Ford Model e, which focuses on electric vehicles, software and connected vehicle technology; Ford Blue, which will continue to build internal combustion engine vehicles to increase profitability; and Ford Pro, which provides commercial and government customers with turnkey ICE and electric fleet management products and services.
Ford Next will take the mobility segment’s place on the balance sheet, and that will report on Ford’s moves autonomous ridesharing and delivery. And finally, Ford Credit, the automaker’s financial services arm.
Lawler said Ford will also release 2022 results early next year, which have been revised for these new segments.
Ford has said this reorganization will also allow the automaker to slash the annual cost of its ICE development efforts by $3 billion, suggesting job cuts are coming, and most likely in the ICE division.
“We have absolutely too many people in certain places. There is no doubt about it. And we have skills that no longer work and we have jobs that need to change,” Farley said. “We have many new work instructions that we have never had before. We are literally redesigning our business virtually, like every part of our business. And you know the ICE business, we want to simplify it, we want to make sure the skills we have and the work instructions we have are as lean as possible. We know that our costs at Ford are not competitive. That’s what I mean by not being satisfied.”
Ford posts Q2 profit, expects to produce 14,000 EVs this month – TechCrunch Source link Ford posts Q2 profit, expects to produce 14,000 EVs this month – TechCrunch