Optimistic Ford confirms full-year profits despite soaring costs

0

The Ford nameplate is seen inside the Ford F-150 Lightning pickup truck during a press event in New York, U.S., May 26, 2021. REUTERS/Brendan McDermid

Join now for FREE unlimited access to Reuters.com

Register

DETROIT, July 27 (Reuters) – Ford Motor Co (FN) reported better-than-expected second-quarter net profit on Wednesday and reaffirmed its full-year profit outlook, but said management was “actively looking” at how to compensate skyrocketing costs.

Ford shares rose 4.8% in after-hours trading.

Results were driven by higher-margin vehicles, partially offset by higher commodity costs and expenses, the company said. Ford said it expects raw material costs to rise by $4 billion for the year.

Join now for FREE unlimited access to Reuters.com

Register

The automaker said nearly all of its 2022 models, including the new F-150 Lightning, are sold out and dealer traffic remains high. Wholesale shipments to dealers in the quarter increased 35% over the prior year.

“We haven’t seen a downturn in the industry,” Chief Financial Officer John Lawler said.

Ford reaffirmed its previous guidance for full-year results, including adjusted earnings before interest and taxes (EBIT) of $11.5 billion to $12.5 billion, up 15% to 25% from the previous year. year, and adjusted free cash flow of $5.5 billion to $6.5 billion.

Ford also reiterated its forecast for an adjusted EBIT operating margin of 10%, including an EBIT margin of 8% on its electric vehicles.

Lawler said the automaker was starting to cut costs in its operations, but wouldn’t discuss specifics. “We are currently not cost competitive,” he told reporters on a conference call. The company’s goal is to reduce costs by $3 billion over several years, he said.

“We’re in much better shape now than at any time before a potential recession,” Lawler said.

Profit rose slightly to $667 million, with diluted earnings per share of 16 cents from 14 cents a year earlier. Non-GAAP adjusted earnings of 68 cents per share beat the consensus of 45 cents and last year’s 13 cents.

Adjusted EBIT of $3.7 billion versus $1.1 billion in the prior year quarter.

Ford said revenue in the quarter jumped to $40 billion, up sharply from $26.8 billion a year ago when supply chain issues curtailed production.

Lawler said Ford is ready for “some price moderation” in the second half of the year, but said demand still exceeds Ford’s ability to keep pace with production.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Joe White and Paul Lienert in Detroit Editing by Chris Reese and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Share.

Comments are closed.