Ford beats profits and sales as operating profit soars


Ford CEO Jim Farley at the Dearborn, Michigan plant, where it will build the electric F-150 Lightning on April 26, 2022.

TBEN | Michael Wayland

Ford Motor Company said adjusted operating income more than tripled from a year ago to $3.7 billion as it was able to deliver more of its hottest new products to customers.

Ford also reiterated its previous full-year outlook, saying it will increase its quarterly dividend to 15 cents a share, the amount it paid before the COVID-19 pandemic.

Following the announcement of the news, shares rose more than 6% in after-hours trading.

Here are the main numbers:

  • Adjusted earnings per share: 68 cents, up from 12 cents in the second quarter of 2021. Wall Street analysts polled by Refinitiv had expected 45 cents.
  • Car Revenue: $37.91 billion, up from $24.13 billion in the second quarter of 2021. Analysts had expected an average of $34.32 billion, according to Refinitiv.
  • Net income: $667 million versus $561 million in the second quarter of 2021.
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Ford said its adjusted earnings before interest and tax, or adjusted EBIT, increased from $1.1 billion a year ago to $3.7 billion as margin improved to 9.3% from 3.9% due to improvements in the supply chain and a more profitable mix of products sold. But despite those gains, Ford’s net income was just $667 million after it accounted for a $2.4 billion drop in the value of its stake in the electric vehicle startup Rivian Automotive.

Ford US sales grew 1.8% in the second quarter from a year ago, fueled by an 8% year-over-year increase in sales of Ford brand SUVs and crossovers. Despite ongoing supply chain challenges, Ford was able to build more of its popular models for its US dealers than a year ago. That was good news for the company’s profit margins, as those soaring SUV sales largely replaced sales of Ford’s now-discontinued and less profitable car models.

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But, the company said, inflation — particularly higher prices for key commodities and transportation — offset those gains to some extent.

Chief Financial Officer John Lawler said Ford is sticking to its previous full-year expectations despite the headwinds of inflation. It still expects adjusted EBIT of $11.5 billion to $12.5 billion for the year, which would represent 15% to 25% growth over last year, with adjusted free cash flow between $5.5 billion and $6.5 billion.

Ford is in the midst of a major restructuring, spending more resources on electric vehicles and cutting $3 billion in annual costs from its internal combustion efforts. Starting next year, Ford will report results for three business units: Ford Blue, which represents its legacy internal combustion operations; Ford Model e, its electric vehicle company, and Ford Pro, its commercial vehicle company.

Lawler said again that Ford is targeting an overall adjusted EBIT margin of the company of 10% — and an EBIT margin of 8% of its EVs — by 2026. Lawler acknowledged that Ford is not “cost competitive” with rivals at this point, something that the company is working to change. But he declined to comment on a Wall Street Journal report that Ford plans to lay off thousands of employees as part of its restructuring plan.

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Ford said its deliveries in Europe are up about 22% from a year ago to about 222,000 vehicles, thanks to supply chain improvements and strong demand for its commercial vehicles. But Ford’s wholesale deliveries in China fell 24% to about 114,000 vehicles in the second quarter, amid prolonged government-imposed closures near Shanghai and other parts of eastern China.

Ford said last week it has secured 100% of the battery supplies it needs to deliver electric vehicles at a rate of 600,000 per year by the end of 2023, and is on track to build 2 million per year by 2026. .