October 04, 2022

Ford 2Q profit up 19%, sees stronger year despite inflation

DETROIT (AP) — Ford Motor Co.’s net income rose 19% in the second quarter as the company pulled together enough computer chips to boost factory output and sales.

The Dearborn, Michigan, automaker said July 27 it made $667 million from April through June, compared with $561 million a year earlier.

The company stuck with its full-year outlook for pretax earnings of $11.5 billion to $12.5 billion and it still expects 10% to 15% growth in vehicle sales to dealers for the full year.

It also boosted its dividend from 10 cents per share to 15 cents per share starting in the third quarter, the level it was before the pandemic.

But Chief Financial Officer John Lawler said the automaker is modeling several scenarios in case the economy slips into a recession. He said Ford is better prepared for a downturn than in the past thanks to lower expenses and a stronger model lineup.

It’s also in the midst of a major transformation of the business that will include white-collar job cuts.

CEO Jim Farley told analysts that the company is too complex and its costs aren’t competitive. It also has too many employees in some areas.

“We have skills that don’t work anymore,” Farley said. “We have jobs that need to change.”

He said the company has too many versions of its internal-combustion vehicles. It plans to create more models off the same electric vehicle underpinnings, spending capital on areas that affect customers such as software, digital displays and automated driving systems.

Areas that will see cuts will be decided by examinations of work flows, Farley said.

Ford has realigned itself into three business units, one for electric vehicles, another for commercial vehicles and another for internal-combustion vehicles.

Lawler said the company’s factories are still slowed by the global shortage of computer chips, which he expects to improve in the fourth quarter.

“Given the constraints that we have, demand is still higher than we can supply,” he said.

Ford also is experiencing higher raw materials costs and general inflation, which Lawler expects to ease in the second half.

The company is planning for macroeconomic problems, with the next issue being energy shortages in Europe due to Russia limiting natural gas supplies.

Ford, he said, has 550 parts-supply companies in high-risk areas of Europe, with 130 sending parts to North America.