Ford says chip shortage to slash Q2 vehicle production in half
Ford Motor Co on Wednesday reported a strong quarterly profit, but warned that the global semiconductor chip shortage will slash production in the second quarter by 50%, before bottoming out and then improving through the year.
The automaker said the global semiconductor shortage would cost it about $2.5bn (roughly R35.6bn) and about 1.1 million units of lost production in 2021.
Ford handily beat Wall Street's profit estimate for the quarter, earning 81 cents a share, compared with the consensus 21 cents, according to Refinitiv IBES data. Last year, the company lost 50 cents a share.
Ford shares were down 3.2% in after-hours trade on Wednesday.
Ford CEO Jim Farley told analysts: "There are more whitewater moments ahead for us that we have to navigate. The semiconductor shortage and the impact to production will get worse before it gets better. In fact, we believe our second quarter will be the trough for this year."
Ford said its net income of $3.3bn (roughly R46.95bn) was the best since 2011, and adjusted pre-tax profit was a record $4.8bn (roughly R68.3bn), including a $900m (roughly R12.8bn) non-cash gain on its investment in Rivian, the electric vehicle start-up. Ford lost $2bn (roughly R28.5bn) in the first quarter of 2020.
The company said the chip shortage will slash full-year earnings before interest and taxes to $5.5bn-$6.5bn (roughly R78.3bn to R92.5bn).
In February, CFO John Lawler said the company was on course to earn $8bn to $9bn (roughly R113.9bn to R128bn) in adjusted EBIT.
Revenue in the quarter increased to $36.2bn (roughly R515.2bn), from $34.3bn (roughly R488.1bn) a year earlier.
Ford was able to offset some of the impact of lost production in this year's quarter by boosting the average transaction price per vehicle sold to nearly $48,000 (roughly R683,097) , compared with just over $44,000 (roughly R626,317) a year ago, according to research firm Edmunds.com.
At the end of the quarter, Lawler said on Wednesday, Ford had 22,000 vehicles built, but parked to wait for chip installation to complete assembly. Among those were some of the company's best-selling F-series pickup trucks, which generate much of Ford's profit.
Overseas, Ford reported revenue in Europe up 13% to $7.1bn (roughly R101.1bn), and $341m (roughly R4.9bn) in pre-tax profit, reversing a year-ago loss.
Revenue climbed 39% to $800m (roughly R11.4bn) in China, where Ford narrowed its loss to $15m (roughly R213.6m), compared with a loss of $241m (roughly R3.4bn) a year earlier.