Ford Motor Co.
swung to a net loss of $3.1 billion in the first quarter, a reversal largely driven by a steep loss in valuation of its stake in electric-vehicle startup
Rivian Automotive Inc.
The Dearborn, Mich., auto maker stood by its year-end guidance of pretax profit of $11.5 billion to $12.5 billion in 2022, despite continued challenges securing enough auto parts to keep assembly lines fully running. The quarterly loss compares with a net profit of $3.3 billion in the first quarter of 2021.
Revenue dropped 5% to $34.5 billion in the first quarter, reflecting lower production. A semiconductor shortage that has dragged on for more than a year continues to stifle Ford’s factory output, resulting in downtime at several plants during the quarter and hindering efforts to restock lots with enough vehicles to satisfy consumer demand.
First-quarter operating profit excluding one-time items was $2.3 billion, or 38 cents a share, edging past analysts’ expectations of 37 cents a share. Still, operating profit was down from the $3.9 billion recorded in the prior-year period.
“The capability of this business is much stronger than what we were able to provide in the quarter,” said
John Lawler,
Ford’s chief financial officer.
Ford shares were roughly flat in after-hours trading. The stock closed Wednesday at $14.85 a share.
An early investor in Rivian, Ford had previously benefited from a post-IPO surge in the startup’s valuation. In 2021, Ford said the rise in Rivian’s stock price resulted in a $8.3 billion paper gain. But shares of Rivian and other EV startups have fallen in recent months as early investor enthusiasm waned and executives slashed production projections. Rivan’s stock has fallen nearly 70% since the start of the year.
Ford said Wednesday its weaker quarterly results were primarily attributed to a $5.4 billion mark-to-market loss on its Rivian investment.
The auto industry’s outlook grew increasingly uncertain during the quarter, a period in which the Ukraine war and pandemic-related restrictions in China have further disrupted auto manufacturing and the supply chain.
Auto makers also are confronting inflationary pressures, particularly on core materials used in manufacturing, such as the lithium, cobalt and nickel needed for electric-vehicle batteries.
Mr. Lawler, the CFO, said on Wednesday that Ford raised vehicle prices in the first quarter, specifically on the Mustang Mach-E electric SUV, to counteract rising commodity costs. He added that executives see a gradual improvement in the availability of semiconductors and expects supplies to improve in the back half of 2022.
Mr. Lawler said higher sales in the second half, along with continued strong pricing as dealership supplies remain tight, will aid the company in meeting its full-year guidance.
reported a 3% slide in net income for the first quarter but stood by its earlier year-end guidance.
GM said customers are paying higher prices for its vehicles, but those gains are being offset by higher commodity and logistical costs. Those expenses are weighing heavier on the bottom line than in previous quarters, the company said.
A year-and-a-half into the top job, Ford Chief Executive
Jim Farley
is trying to move aggressively into electric vehicles and restructure internal operations to more closely align with newer rivals such as
Tesla Inc.
that don’t have legacy gas-engine businesses. In March, the company revealed it was separating its electric-vehicle operations from those dedicated to gas-engine vehicles, by creating two distinct divisions.
In the near term, Ford is still trying to get its manufacturing operations back on track after losing around 100,000 units of production in the first three months of the year, according to research firm AutoForecast Solutions.
Ford’s earnings follow a strong showing from Tesla, which last week posted a $3.32 billion profit in the first quarter. GM’s quarterly results this week also outpaced analysts’ predictions.
Ford has made several recent expansions into the electric-vehicle space, including plans to spend $7 billion for four new factories in Tennessee and Kentucky. It also this week began building an electric version of its bestselling F-150 pickup truck, a model that will start at $40,000, undercutting many rivals on price.
The company’s stock, however, has fallen 28.5% this year. The S&P 500 is down 12% since Jan. 1.
Ford dealerships are straining to fill their lots and meet still-strong consumer demand. As inventory levels remain crunched, analysts predict car prices will stay high for the months to come, helping to counter rising costs pressures for auto makers.
Write to Nora Eckert at [email protected]
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Source: https://www.wsj.com/articles/ford-posts-3-1-billion-first-quarter-loss-maintains-2022-outlook-11651092063?mod=itp_wsj&yptr=yahoo