Ford’s quarterly profit increased nearly 20% from a year earlier

Automakers are seeing improvements in the supply of computer chips, but shortages continue to disrupt production.

The latest reading on the situation comes from Ford Motor, which said on Wednesday that its second-quarter profit had risen nearly 20 percent from a year earlier as global chip shortages hit its operations hard.

The automaker posted a profit of $667 million, up from $561 million a year earlier. Its revenue increased substantially, to $40.2 billion from $26.8 billion, thanks to increased vehicle sales and higher prices.

Globally, Ford sold just over a million vehicles in the latest quarter, a sharp increase from 764,000 in the 2021 period.

“We are seeing pent-up demand and our dealers are selling vehicles as fast as we can produce them,” Ford Chief Financial Officer John Lawler said in a conference call.

But most of those numbers are still below what might be considered normal. Before the pandemic, in 2018 and 2019, Ford’s second-quarter sales topped 1.4 million vehicles, even with a weaker model lineup than today.

Over the past two years, Ford has redesigned its F-150 pickup truck and added several vehicles that generated excitement, including the new Bronco sport utility vehicle, the electric Mustang Mach E and the electric F-150 Lightning. It has also stopped making cars for the US market, except for the Mustang coupe.

On Tuesday, General Motors also reported higher revenue, helped by a rebound in chip supplies. But it also doesn’t get as many chips as it would like, leaving the company unable to sell as many vehicles as customers want to buy.

GM said this month that it had 95,000 vehicles made without certain electronic components affected by chip shortages. The company expects to finish them and ship them to dealers by the end of the year.

On Wednesday, Ford said it had 53,000 vehicles waiting for final electronic parts before it could ship them.

Ford, GM and other automakers are benefiting from high prices for new vehicles. That was one reason for Ford’s nearly 50 percent rise in second-quarter revenue. At the same time, however, inflation is also driving up the cost of raw materials and parts. Ford said it expected a $4 billion increase in the cost of materials this year.

GM has said its costs will rise by about $5 billion. Its second-quarter profit fell 40 percent to $1.7 billion, largely due to higher costs.

Lawler, Ford’s chief financial officer, said his company would be well prepared if the economy slipped into a recession. It’s flush with cash, its dealer inventories are low and it has a substantial order book for Broncos and other vehicles, he said.

“We’re in much better shape heading into a potential recession than any other time I can think of,” Lawler added.

He also said that Ford was reshaping almost every aspect of the company. “Today we are not cost competitive,” he said, adding that jobs could be eliminated.

“As new skills are needed, old skills are no longer needed and there could be changes to the types of skills we have in the company,” he said.

This year, Ford divided its operations into two divisions. One focuses on electric vehicles and is expected to grow rapidly and require substantial investments in new technologies and plants. The other focuses on manufacturing gasoline models and will emphasize cost control and profit generation.

Leave a Comment

Your email address will not be published.