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Wednesday, July 28, 2021 4:56:44 PM
Ford Produces Surprise Profit. Shares Rise
By: Al Root | July 28, 2021
Automotive giant Ford Motor posted a surprise second-quarter profit, shrugging off impacts of the global semiconductor shortage. What’s more, full-year earnings guidance is moving higher—so is Ford stock in after-hours trading.
Ford (ticker: F) reported 13 cents in per-share earnings from $26.8 billion in sales. Wall Street was looking for a 3-cent loss from $23 billion in sales. Ford stock is reacting positively, up 2.7% in after-hours trading. Vehicle mix helped boost sales and earnings. Ford made higher-end vehicles in the quarter.
It’s a surprise profit. Wall Street projected a loss because of the global semiconductor shortage that is curtailing car production. Ford management estimated their company would make about 50% of planned production in the second quarter because of a lack of chips. Ford lost about 17% of first-quarter production.
Back in April, when reporting first-quarter numbers, Ford said the chip shortage should cost the company about $1.1 billion in full-year operating profit and that it expected to produce about $6.5 billion in full-year operating profit, including the impact of the shortage.
In the first two quarters of the year, Ford earned roughly $6 billion in operating profit. For the second half of 2021, Ford expects to earn about $3 to $4 billion.
That means for the full year, Ford now expects about $9 to $10 billion in full-year operating profits, much better than the $2.8 billion earned in 2020. The new guidance is also much better than the $6.5 billion management guided to in April.
Free cash flow was negative $5.1 billion in the second quarter. Cash flow should improve as Ford production increases and the chip shortage fades.
That’s a negative in the quarter. But there were other positives. Ford Credit, for instance, posted a record profit of $1.6 billion. The auto industry, including automotive lending, is doing well coming out of the pandemic-affected 2020.
Overall it’s a sold earnings print. The after-hours rise adds to year-to-date gains. So far in 2021, Ford stock is up about 56%, far better than comparable 17% and 14% gains of the S&P 500 and Dow Jones Industrial Average, respectively.
Ford management hosts a conference call at 5 p.m. eastern time to discuss results. Analysts and investors will be interested in hearing about the chip shortage and production outlook for the third quarter.
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By: Al Root | July 28, 2021
Automotive giant Ford Motor posted a surprise second-quarter profit, shrugging off impacts of the global semiconductor shortage. What’s more, full-year earnings guidance is moving higher—so is Ford stock in after-hours trading.
Ford (ticker: F) reported 13 cents in per-share earnings from $26.8 billion in sales. Wall Street was looking for a 3-cent loss from $23 billion in sales. Ford stock is reacting positively, up 2.7% in after-hours trading. Vehicle mix helped boost sales and earnings. Ford made higher-end vehicles in the quarter.
It’s a surprise profit. Wall Street projected a loss because of the global semiconductor shortage that is curtailing car production. Ford management estimated their company would make about 50% of planned production in the second quarter because of a lack of chips. Ford lost about 17% of first-quarter production.
Back in April, when reporting first-quarter numbers, Ford said the chip shortage should cost the company about $1.1 billion in full-year operating profit and that it expected to produce about $6.5 billion in full-year operating profit, including the impact of the shortage.
In the first two quarters of the year, Ford earned roughly $6 billion in operating profit. For the second half of 2021, Ford expects to earn about $3 to $4 billion.
That means for the full year, Ford now expects about $9 to $10 billion in full-year operating profits, much better than the $2.8 billion earned in 2020. The new guidance is also much better than the $6.5 billion management guided to in April.
Free cash flow was negative $5.1 billion in the second quarter. Cash flow should improve as Ford production increases and the chip shortage fades.
That’s a negative in the quarter. But there were other positives. Ford Credit, for instance, posted a record profit of $1.6 billion. The auto industry, including automotive lending, is doing well coming out of the pandemic-affected 2020.
Overall it’s a sold earnings print. The after-hours rise adds to year-to-date gains. So far in 2021, Ford stock is up about 56%, far better than comparable 17% and 14% gains of the S&P 500 and Dow Jones Industrial Average, respectively.
Ford management hosts a conference call at 5 p.m. eastern time to discuss results. Analysts and investors will be interested in hearing about the chip shortage and production outlook for the third quarter.
Read Full Story »»»
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