Ford Motor Co. CEO Jim Farley’s spent much of the past few months lowering expectations for the company’s second quarter financial results. However, the numbers are in, and the automaker turned a $561 million profit during the period.
For Q2, Ford reported adjusted earnings before interest and taxes (EBIT) of $1.1 billion on revenue of $26.8 billion. The results are a pleasant surprise during a difficult time for the company, which was expected to post a loss for the quarter.
The results are good enough that Ford revised its full-year adjusted EBIT forecast upward about $3.5 billion to somewhere between $8 billion and $10 billion. The revision comes, in part, from the better-than-expected second quarter, but also an expected 30% sequential increase in volume between the first and second halves of 2021.
Despite production issues, profits still came
Naturally, officials were quick to credit the company’s reformation efforts, which have been accelerated since Farley took over as CEO last October.
“We’re on a new path, with the Ford+ plan, financial flexibility and a resolve to make us an even stronger company,” said CFO John Lawler in a statement. “We’re developing connected, high-quality vehicles and services that are great for customers and profitable for Ford.”
For the company, it was able to still produce enough of its highly desirable — and highly profitable, in some cases — vehicles to offset the production delays and stoppage. Ford’s biggest delays came with its F-Series pickups, full-size SUVs and midsize Explorer SUVs. The key factor: highly profitable.
“The good news for Ford is that it has continued to see increases in average transaction prices for the vehicles it has been able to sell, which should help drive profitability for the company,” said Jessica Caldwell, Edmunds’ executive director of insights.
“Ford is also poised for a big comeback in the near future once it starts to replenish its chip supply for its F-series and can make good on the rollout of some of its highly anticipated vehicles like the F-150 Lightning, Maverick and newly on sale Bronco.”
Product news provides optimism
The aforementioned response from consumers to its new Bronco Sport and now full-size Bronco gives the company a reason to expect a strong second half of 2021. Additionally, its electrification efforts are beginning to pay off.
Exiting the second quarter, the combined U.S. customer-sold retail order bank for Mustang Mach-E and other Ford vehicles was seven times larger than at the same point in 2020.
With additional current and anticipated demand for models including the Bronco SUV and, later, Maverick and F-150 Lightning pickups, Farley said the business is “spring loaded” for a rebound when semiconductor supplies stabilize and more closely match demand. The F-150 Lightning continues to gain potential buyers with reservations exceeding the 120,000 mark.
Farley said the company’s chip issues are beginning to abate.
“We’re seeing signs of improvement in the flow of chips now in the third quarter,” Farley said during the company’s earnings call, “but the situation remains fluid, especially due to the delay in the ramp up of Renasys, a company Ford has particular exposure to.”