Ford Sinks as Shortages and Commodity Costs Weigh on Profit

(Bloomberg) — Ford Motor Co. shares tumbled the most in almost two years after the automaker missed estimates for quarterly earnings and cautioned it may get off to a slow start to the year due to supply chain issues.

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The carmaker posted earnings of 26 cents a share excluding some items for the last three months of 2021, trailing the 45-cent average analyst estimate. Shortages of critical components including semiconductors disrupted production and will weigh on vehicle deliveries to dealers this quarter.

“We have incredible demand for our products,” John Lawler, Ford’s chief financial officer, told reporters on a call. “It’s the supply chains that limited what we could produce and what we could provide. And we see that easing into ’22, and you’ll see that flowing through our profits.”

Ford shares fell 12% at 9:42 a.m. in New York, the biggest intraday decline since March 2020. The stock was down 4.2% this year through Thursday’s close.

Sales rose 5% to $37.7 billion in the fourth quarter, with automotive revenue accounting for $35.3 billion of that total. Some analysts had anticipated double-digit sales growth, Lawler said. The company is estimating higher commodity costs will be a $1.5 billion to $2 billion headwind this year.

Investors have cheered Chief Executive Officer Jim Farley’s effort to accelerate Ford’s switch to electric vehicles, sending the shares up 136% last year. Ford’s market capitalization briefly topped $100 billion.

In recent weeks, the company’s valuation has fallen back to around $80 billion.

“Financial performance is obviously critical,” Farley said in a statement. “We’re also proud that customers see how Ford is taking EVs mainstream.”

Bloomberg News reported on Feb. 1 that Ford is considering adding up to $20 billion to its EV spending over the next decade to convert factories to battery powered models. Farley has already tripled output of its electric Mustang Mach-E in Mexico and doubled production of the F-150 Lightning going on sale this spring.

For this year, Ford forecast earnings before interest and taxes will rise 15% to 25% to as much as $12.5 billion. That compares with analysts’ estimates of $12.2 billion. Lawler projected a high-single-digit to low-double-digit percentage decline in wholesales for the first quarter due to supplier shortages.

Crosstown rival GM earlier this week reported fourth-quarter earnings that beat analysts’ estimates, but its forecast for the year was little changed from 2021.

Read more: GM sees high costs, budget cars capping profit

Dearborn, Michigan-based Ford has seen car buyers pay up for its models as the pandemic and a shortage of semiconductors slashed inventory on dealer lots. The average sale price for Ford models in the U.S. reached almost $51,000 in the fourth quarter, up from $46,211 a year earlier, according to automotive researcher Edmunds.com.

In its home market of North America, Ford increased adjusted profit before interest and taxes by 70% in the fourth quarter to $1.82 billion, mainly due to strong demand for vehicles like the Bronco SUV and Maverick pickup. But that undershot the $2.34 billion profit projected by analysts.

Ford’s loss in China, the world’s largest car market, more than doubled in the quarter to $150 million from $66 million in the year-earlier period.

(Updates with share decline in first and fourth paragraphs)