DETROIT — Ford Motor Co. on Wednesday posted its highest first-quarter net income in a decade but said it could lose half of planned production in the second quarter because of the semiconductor shortage that has halted some high-profit assembly lines.
The automaker said it earned $3.3 billion (all figures in USD) from January through March as it recovered from the coronavirus pandemic that hammered the company with a $2 billion net loss a year earlier.
Adjusted earnings before interest and taxes rose to $4.8 billion in the first quarter from a $600 million loss in the same period a year earlier. Its adjusted margin rose to 13.3 per cent.
Revenue jumped to $36.2 billion from $34.3 billion in the first quarter of 2020.
The automaker made $1.15 billion in the first quarter of 2019 — the last comparable time before the pandemic.
“The first quarter of the year really defies an easy explanation or a pithy sound bite, but if I had to sum it up one way, it would be this: we’re executing on our plan and I’m excited to say Ford is becoming a stronger, more resilient company,” CEO Jim Farley said on a call with journalists.
Still, he noted there was “more white water moments ahead for us to navigate,” noting the chip crisis would “get worse before it gets better.”
Ford lowered the top end of its full-year guidance, with the semiconductor shortage costing an estimated $2.5 billion.
It expects full-year EBIT of $5.5 billion to $6.5 billion, down from the $5.5 billion to $8 billion range it gave previously. The previous range included a potential $1 billion to $2.5 billion impact from the chip shortage.
The company now expects to lose 1.1 million units of production throughout 2021, much greater than its earlier projection of 200,000 to 400,000 vehicles.
“We, and many in the industry, now believe the global shortage may not be fully resolved until 2022,” CFO John Lawler said.
Lawler said that Ford has about 22,000 vehicles partially built but missing components due to the chip shortage. He said the company had a 33 days-supply of retail vehicles available and that he expected that number to “tighten a little further.”
Lawler said the company had put some new processes in place to help customers and dealers find specific models that might be hard to come by but did not elaborate.
Ford shares slipped 3.1 per cent to $12.04 in after-hours trading.
Ford posted earnings of $2.9 billion in North America, including a 12.8 per cent margin. Revenue rose five per cent to $23 billion. The automaker benefited from new vehicles like the Bronco Sport and redesigned F-150 despite capacity constraints from the chip shortage.
Ford also earned $341 million in Europe and $201 million in its International Markets Group, its best quarterly performance to-date. It lost $73 million in South America and $15 million in China.
Despite the loss in South America, Ford noted it was the sixth consecutive quarter of better year-over-year results there.
“Overall our business units did a fantastic job prioritizing newly-launched products and making sure we process customer orders and high-margin vehicles quickly, and that was all in a supply constrained environment,” Lawler said.
Despite the negative impact of the chip shortage, Farley said Wednesday the industry gained from tighter inventories that have driven dealer profits higher.
“There’s real goodness here,” he said. “Ten years ago I saw this industry go from 30 days-supply back to 100. We’re not going to let that happen. This is a better way to run our business.”
Aside from the chip shortage constraints, Farley said Ford was benefiting from high interest in its newest models like the Bronco Sport and Mustang Mach-E.
He added: “It feels like we’ll be chasing demand for quite some time.”