Ford cruises by chip shortage, boosts outlook
FOX Business' Grady Trimble speaks with Ford exec Darren Palmer on electric car models at the Chicago Auto Show.
Ford Motor Co. revved up surprise second-quarter profits this year – powered by climbing pickup and SUV prices even as a global computer chip shortage forced it to pump the brakes on production, which dropped by roughly half.
The company reported revenue of $26.8 billion and net income of $561 million – beating expectations and fueling hopes for the future of Ford+, the company’s new business plan.
"Ford+ is about creating distinctive products and services, always-on customer relationships and user experiences that keep improving," Ford President and CEO Jim Farley said in a statement. "And it’s already happening – there are great examples everywhere you turn at Ford, and the benefits for our customers and company will really stack up over time."
The company also touted 120,000 reservations for the new electric F-150 Lightning and soaring Mustang Mach-E and Bronco orders – making the company "spring loaded" for a surge in sales when global supply lines recover from a semiconductor shortage that has impacted companies in a range of industries.
A Ford F150 XL truck is displayed, Monday, July 26, 2021, at a dealership in Hialeah, Fla. Sky-high sales prices for its pickup trucks and SUVs helped Ford Motor Co. turn a surprise second-quarter profit despite a global shortage of computer chips th
Production of the new Lightning is also creating 500 jobs at the company’s Rogue Electric Vehicle Center in Dearborn, Mich.
The chip shortage is expected to last at least another year, according to some experts – although the company has reportedly mulled shipping incomplete vehicles to dealer lots, where the chips can be installed as they come in.
But despite the stalled production, soaring demand for new Ford vehicles allowed the company to lower incentives and still rake in sales. To keep pace, the company used what chips it had available on its most profitable vehicles.
In June, Ford's sales of electrified vehicles increased 117% for the month and set a half-year record of 56,570 vehicles. Meanwhile, Ford's overall vehicle sales for the month plummeted 26.9% year-over-year as the auto industry continues to feel the pain from an ongoing semiconductor chip shortage.
"We’re on a new path, with the Ford+ plan, financial flexibility and a resolve to make us an even stronger company," CFO John Lawler said in a statement. "We’re developing connected, high-quality vehicles and services that are great for customers and profitable for Ford."
Ford’s earnings came in at 13 cents per share – dramatically beating out projections of 3-cent losses, according to FactSet.
The strong showing lifted the company’s projected full-year pretax income to between $9 billion and $10 billion – an improvement of about $3.5 billion.
Ford also reported "persistent, growing strength" in Europe and the success of its Lincoln brand in China – where the U.S. automaker reported its highest ever quarterly retail sales.
But Lawler told the Associated Press that increased prices for raw materials will take about $2 billion out of Ford’s pretax income in the second half. And Ford’s credit subsidiary is expected to see pretax profits drop by about a billion dollars as lease returns are expected to drop in value.
Ford has been accelerating its drive toward electric vehicles as well – announcing a new battery factory in Romulus, Mich., set to open up next year.
The new collaborative learning lab, dubbed Ford Ion Park, represents $100 million of the automaker's total $185 million investment in developing, testing and building electric vehicle battery cells and cell arrays. It is also part of the company's $30 billion investment in electrification by 2025.
Fox News’ Lucas Manfredi and the Associated Press contributed to this report.