Ford’s fourth-quarter earnings were unexpectedly lower than projected, but the firm said it expects a better year in 2022.
Except for extraordinary things, the company’s profit was $1.1 billion, a decrease from $1.4 billion a year earlier on the same basis. Earnings were expected to rise to $1.7 billion, according to Refinitiv’s poll of analysts.
The company’s revenue climbed 5% to $37.7 billion in the quarter, despite an 11% drop in global sales to 1.1 million vehicles. Because of the ongoing shortage of semiconductors and supply chain challenges, the majority of the industry’s leading automakers have been forced to temporarily close their plants and reduce production during the quarter, resulting in low stocks of new vehicles for customers to purchase.
As a result, automakers no longer have to provide incentives to entice buyers, resulting in record-high costs for vehicles.
Despite the supply chain challenges, analysts had predicted that Ford would enhance profitability and match the results of some of its competitors, such as General Motors, which reported record earnings on Tuesday.
Although it reported a loss for the third quarter, the business anticipates its full-year operating profits to rise 15 to 25 percent this year due to a return to profitability in several parts of its global operations, such as Europe and China.
“We’ve also made progress outside of North America, and this is really important,” CEO Jim Farley said in remarks to investors. A single-legged stool Ford has been for far too long.
To back up their positive assessment, executives stressed that they were satisfied with the quarter’s performance, noting that their team had done well in the face of some challenging circumstances.
In spite of the Covid problem and chip shortages, “our overall business is in terrific shape,” stated Farley.
Supply chain concerns are expected to improve during the year, but the current quarter has been impacted by some Covid-related supply issues, according to the business.
CFO John Lawler remarked, “We had supply chain issues hitting us this quarter.” “Many of our primary suppliers were interrupted by Omicron. They were unable to meet demand. They were unable to provide us with the supplies we needed.”
Lawler, on the other hand, said Ford should be in a good position once supply difficulties have been resolved because of the high demand for new vehicles.
“In the fourth quarter, there was a lot of interest. You would have witnessed a better quarter if we could have matched the demand and production without the interruptions ” Then, he added. Because of these supply limits, “there is going to be considerably more of a tailwind versus some of the headwinds we’re witnessing” as we move into 2022, according to the report.
Ford’s early $500 million investment in electric vehicle maker Rivian, which had a very successful initial public offering during the quarter, is one positive development for the company’s bottom line.
This led to a one-time gain of $8.2 billion in the quarter and a total of $9.1 billion for the year for Ford’s Rivian investments. That potential bonanza, at least on paper, coupled with other special factors, boosted Ford’s net profits for the quarter to $12.3 billion and for the year to $17.9 billion.
Still, Rivian shares have had a poor year for electric vehicle (EV) equities thus far. In Rivian, Ford’s stake was worth $10.6 billion in 2021 but was only worth $6.3 billion at the end of Wednesday’s trading.