Ford loses $3.1 billion, hit by investment and chip shortage

Ford loses $3.1 billion, hit by investment and chip shortage thumbnail

Ford has reported a $3.1 billion loss for the first quarter, in large part because of a drop in the value of its investment in an electric-vehicle startup

April 27, 2022, 11: 06 PM

3 min read

DALLAS — Ford Motor Co. reported Wednesday that it lost $3.1 billion in the first quarter, weighed down by its investment in an electric-vehicle startup, and its revenue slid as a shortage of chips limited the supply of pickups and SUVs in North America. Company executives shifted their focus away from the loss to show results that did not include the lower value of its Rivian stake. Ford claimed that it made $2.3billion in pretax profit and that it is on track to meet its full-year target.

Ford said it sold 966,000 vehicles in the first quarter, down 9% from a year earlier. Chief Financial Officer John Lawler stated that the quarter had mixed results.

“Clearly the demand for our new products is very strong,” Lawler said, “yet we continue to have issues with supply of chips, which constrained us, and in particular here in North America, it hit us disproportionately on our large vehicles.”

The chip shortage has caused Ford and General Motors to close multiple North American factories for a week or two at a time, including plants that build popular full-size pickups. Ford executives stated that they have also been subject to inflationary pressures from suppliers but have been able recover this in higher vehicle prices. If inflation continues to rise, additional increases are possible, they said.

The company said this week that it has built about 2,000 copies of its new electric pickup, the F-150 Lightning, at a plant near Detroit and would begin delivering them to customers. Ford hopes to increase its share of electric-vehicle sales by acquiring this truck.

CEO Jim Farley said Wednesday that buyers of the F-150 Lightning are generally not traditional truck owners.

” The customer profile is significantly younger. On a conference call with analysts, he stated that it’s in California and New York where we don’t normally sell full-size trucks. Rivian’s appeal to younger consumers was a major reason for investor interest. Ford’s 12% stake was worth more than $10 billion after the startup’s IPO in November. But after nearly touching $180, the shares have since tumbled — they closed Wednesday at $31. 22 — dragging down the value of Ford’s stake.

Ford lost more than General Motors which reported a $2. 94 billion quarterly profit on Tuesday.

The first quarter loss was $3. 11 billion compared with a profit of $3. 26 billion in the same period last year. Revenue skidded 9% lower that a year ago, to $34. 48 billion. Ford said it earned 38 cents a share in the latest quarter after adjusting to exclude one-time items.

Analysts expected Ford to earn an adjusted 37 cents per share on revenue of $34. 53 billion, according to a FactSet survey.

The company based in Dearborn, Michigan, stood by its target of achieving full-year earnings before interest and taxes of $11.5 billion to $12.5 billion. After gaining 1% during the regular session,

Ford’s shares gained 1% in after-hours trades.

ABC News

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