Ford reported a net loss of $3.1 billion for the first quarter, largely due to the valuation of its Rivian investment.
The company reported revenue of $34.5 billion for Q1 and adjusted earnings of $2.3 billion. The red ink is due to what the company described as a “mark-to-market” loss of $5.4 billion on the company’s investment in Rivian.
Despite the accounting, the company confirmed its earlier 2022 earnings guidance — which calls for it to be well into the black: adjusted earnings of $11.5 billion to $12.5 billion, which could be as much as a 25% improvement over 2021.
Hit by the chips
The company’s earnings were limited by the ongoing chip shortage. In fact, the company delivered fewer than 1 million vehicles during the quarter — a 9% drop compared to a year ago due to the shortages.
Manufacturing rates were significantly improved during March. The company entered the second quarter with what CEO Jim Farley called an “extremely healthy” order bank.
Despite the ongoing chip issues, the company’s adjusted EBIT margin came in at 6.7%. Officials attributed it to higher pricing, although noting that higher commodities costs, the drop in sales and a lower mix of pickups and large SUVs, kept lower than it could have been.
The company again ended the quarter with strong total company cash and liquidity – nearly $29 billion and $45 billion, respectively. Both of those numbers included Ford’s stake in Rivian, which was valued at $5.1 billion on March 31, down from $10.6 billion at the end of 2021.
Show me the money
As usual, the company’s bit profit center with the North American market, reporting $1.6 billion in EBIT and once again pointing to the disruptions caused by the chip crisis the primary reason for it not being higher.
Collectively, the company’s Europe, South America, China and International Markets Group business units — all of which have been restructured and refocused over the past few years – produced EBIT of $300 million. The company offered other insights about the rest of the year, including:
- Improved semiconductor availability during the second half of the year
- Full-year vehicle wholesale volumes increasing 10% to 15% from 2021
- Continued strong pricing, though with a dynamic relationship between prices and vehicle volumes
- Commodity costs up about $4 billion year-over-year, along with inflationary effects on a range of other expenses
- EBT from Ford Credit that remains strong, but is lower than in 2021, and
- Ongoing investment in the Ford+ plan for growth and value creation.
The company’s outlook also assumes that disruptions in the supply chain and local vehicle manufacturing operations resulting from renewed COVID-related health concerns and lockdowns in China do not further deteriorate.