Ford posts second-quarter profit, expects to produce 14,000 electric cars this month • TechCrunch | Rare Techy

Ford Motor has avoided some of the pain and losses that rival General Motors experienced in the second quarter.

Ford on Wednesday reported revenue of $40.2 billion, a 50% year-over-year increase, and adjusted operating income that tripled to $3.7 billion. The numbers, which completely shattered Wall Street expectations, sent shares up as much as 6% after hours. Shares have since settled and are up 5.18%.

Analysts polled by Yahoo Finance expected Ford to post revenue of $34.78 billion and earnings of $0.45 per share. Ford reported Q2 adjusted EPS of $0.68, up from $0.12 in Q2 2021.

That’s quite a turnaround from Ford’s first-quarter results, when it reported a $3.1 billion net loss, largely due to a decline in the value of its stake in EV startup Rivian. And it stands out from rival General Motors, which on Tuesday announced a 40% profit drop in the second quarter.

The entire auto industry has struggled with supply chain disruptions that have caused production bottlenecks and reduced sales as a result. Ford also saw supply chain constraints cause losses in its China business. However, these losses were compensated by sales growth in North America and Europe.

In the US, sales in the second quarter increased by 1.8% compared to a year ago. The big winners were SUVs and crossovers, sales of which increased by 8% year-on-year. That lifted Ford’s second-quarter net profit to $667 million, compared with $561 million in the same quarter of 2021.

Internationally, Ford said it remains sustainably profitable as a result of earlier restructuring efforts. Ford CFO John Lawler said European sales were strong, up 22% to 222,000 vehicles, helping to offset the adverse effects of supply chain disruptions linked to the Russian war. Thanks to this, Ford was able to make a modest profit in Europe.

Ford’s wholesale shipments in China fell 24% in the quarter to about 114,000 vehicles.

“In China U.S posted a a loss like a local economy and car to the industry were significantly disturbed beside pandemicrelated restrictions and closures,” Lawler said. “Now Lincoln continues to to be a profit pillar for a area, getting share in a a quarter with together commercial vehicles.”

Ford instructions

Ford reaffirmed its guidance for full-year 2022 results, expecting adjusted EBIT of $11.5 billion to $12.5 billion, up 15% to 20% from last year. Ford expects to finish the year strong with $5.5 billion to $6.5 billion in cash.

Ford CEO Jim Farley said during Wednesday’s earnings call that he expects the company to produce 14,000 electric cars worldwide this month, 600,000 next year and 2 million by 2026.

Despite expectations for sales growth, Ford warned that profits would be hit by inflation and higher prices for key goods and transportation.

EV supply chain

Looking to avoid the same headaches we experienced during the COVID-19 pandemic, Farley highlighted the company’s work to strengthen its supply chain, particularly around electric vehicles.

Ford has been quick to take advantage of the offerings available to OEMs and is also diversifying its battery chemistries, Farley said.

Last week, Ford announced plans to use lithium iron phosphate batteries, considered a cheaper cell chemistry, for some of its electric vehicles. The automaker also said it has secured 100% of battery stocks to deliver 600,000 electric cars a year by the end of 2023.

That doesn’t mean Ford is immune to global supply chain issues that could arise in the future, especially in Europe. Farley addressed the impending energy crisis in Europe by identifying 550 active suppliers in high-risk countries such as the Czech Republic, Germany and Slovakia.

“U.S think that a risk is sometimes now and [mid-2023] when they can manage through a energy problems,” Farley said. “We is about 130 suppliers for U.S North America vehicle production in that 550 list, and U.S now is a 30-day buffer backup. So U.S is doing everything U.S can together a things U.S know.”

Farley also noted that Ford’s suppliers have been dealing with labor shortages and costs have risen as a result, but Ford is well-positioned to meet the costs it can forecast.

Changes to the dealer model

One of the ways Ford is positioning itself to cut costs is to change its dealer model.

Ford appears to be giving dealers a chance to sell more EVs by eating some of the distribution costs. However, Ford is also moving to a low-inventory model, a direct sales type where a customer can order a vehicle online and have it shipped directly to them a month later.

According to Farley, Ford provides a more seamless e-commerce experience, whether the customer is in the dealership or “in the bunny’s slippers.” The CEO also said that Ford is investing in a post-purchase marketing model.

“So I see dealer margins still being very competitive, but they’re making those margins going forward,” Farley said.

Future reporting structure

As Ford shared in March, the automaker plans to begin reporting operations and financial results through its three new business segments, rather than just one combined automotive segment: Ford Model e, which is dedicated to electric vehicles, software and connected vehicle technology; Ford Blue, which continues to build internal combustion engine vehicles to increase profitability; and Ford Pro, which offers commercial and government customers turnkey ICE and electric products and services for fleet management.

Ford Next replaces the mobility segment on the balance sheet and reflects Ford’s moves into autonomous ride-sharing and delivery. And finally, Ford Credit, the automaker’s financial services arm.

Lawler said Ford will also share 2022 results early next year, adjusted for these new segments.

Ford has said the restructuring will also allow the automaker to cut $3 billion in annual costs from ICE development, suggesting job cuts; probably in the ICE department.

“We have too many people in certain places. There’s no doubt about it. And we have skills that are no longer working, and we have jobs that need to be changed,” Farley said. “We have a lot of new job openings that we’ve never had before. . We are literally virtually redesigning our business, like every part of our business. And you know the ICE business, we want to simplify it, we want to make sure our skills and work reports are as simple as possible. We know our costs are not competitive at Ford. That’s what I mean by we’re not happy.