Ford CEO Jim Farley at the company’s plant in Dearborn, Michigan, where it is building the electric F-150 Lightning on April 26, 2022.
CNBC | Michael Wayland
Ford Motor Company said its adjusted operating income more than tripled from a year ago to $3.7 billion as it was able to offer customers more of its hottest new products.
Ford also reiterated its previous full-year guidance and said it will raise its quarterly dividend to 15 cents a share, the amount it paid before the Covid-19 pandemic.
Shares rose more than 6% in extended trading after the news was released.
Here are the key 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.Automotive revenue: $37.91 billion, up from $24.13 billion in the second quarter of 2021. Analysts had expected $34.32 billion, on average, according to Refinitiv.Net income: 667 million dollars compared to $561 million in the second quarter of 2021.
Ford said its adjusted earnings before interest and taxes, or adjusted EBIT, rose to $3.7 billion from $1.1 billion a year ago as its margin improved to 9.3 percent of 3.9% in supply chain improvements and a more profitable mix of products sold. But despite that gain, Ford’s net income was just $667 million after it took a $2.4 billion drop in the value of its stake in electric vehicle startup Rivian Automotive.
Ford’s U.S. sales rose 1.8% in the second quarter from a year ago, driven by an 8% year-over-year increase in sales of Ford-branded SUVs and crossovers. Despite ongoing supply chain challenges, the automaker was able to build more of its popular models for its U.S. dealers than it did a year ago. This was good news for the company’s profit margins, as these incremental SUV sales largely replaced sales of Ford’s now-discontinued, less profitable car models.
But, the company said, inflation, specifically higher commodity prices and transportation, offset those gains to some extent.
Chief Financial Officer John Lawler said that despite inflation headwinds, Ford is sticking to its previous guidance for the full year. 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, devoting more resources to electric vehicles and cutting $3 billion in annual costs from its internal combustion development efforts. Starting next year, the company will report results for three business units: Ford Blue, which represents its legacy internal combustion business; Ford Model e, its electric vehicle business; and Ford Pro, its commercial vehicle business.
Lawler reiterated that Ford is targeting a 10% total company adjusted EBIT margin — and an 8% EBIT margin for its electric vehicles — by 2026. He acknowledged that it is not “competitive in costs” with rivals at the moment, something the company is working to change. But he declined to comment on Wall Street Journal report that Ford plans to lay off thousands of workers as part of its restructuring plan.
Ford said its European shipments rose about 22 percent from the year-ago period to about 222,000 vehicles on supply chain improvements and strong demand for its commercial vehicles. But Ford’s wholesale shipments to China fell 24% in the second quarter to about 114,000 vehicles amid widespread government-mandated shutdowns near Shanghai and elsewhere in eastern China .
Ford said last week it has secured 100 percent of the battery supplies it will need 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 by 2026 .
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