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Earnings Results: Ford sales stumble on ‘persistent’ supply problems

Ford Motor Co. late Thursday swung to a quarterly profit, but fell short of what Wall Street had hoped, with sales also well below expectations as “persistent supply-chain disruptions” hampered its ability to meet strong demand.

Ford F, -3.59% said it earned $12.3 billion, or $3.03 a share, in the fourth quarter, swinging from a loss of $2.8 billion, or 70 cents a share, in the year-ago quarter. Adjusted for one-time items, Ford said it earned 26 cents a share.

Ford sales rose 5% to $37.7 billion. Analysts polled by FactSet expected the auto maker to report adjusted earnings of 45 cents a share on sales of $41.2 billion.

“While we remain in the teeth of the COVID crisis and semiconductor shortages, our overall business is still in great shape,” Chief Executive Jim Farley said on a conference call with analysts after the results.

The stock fell more than 4% in the extended session, remaining in the red as Farley and other Ford executives took questions from analysis and investors.

Related: GM ‘came out swinging’ in Q4, surprising Street with optimistic 2022 view

Some “may remain skeptical that a 118-year-old company like Ford will emerge as a winner in these disruptive times for our industry,” Farley said. “And I’m OK with that. We’re going to compete like the challenger. Speak with our actions, prove ourselves, over time.”

Nowadays, few customers ask Ford why it phased out sedans, a controversial decision in 2018, and many more are asking to take delivery of Ford’s new SUVs and pickup trucks, he said. Ford plans on taking “full advantage” of a first-mover position in the fully electric pickup market, starting with its F-150 Lightning, he said.

See also: Tesla stock shrugs off second over-the-air recall for auto maker this week

Ford has more than 275,000 orders or reservations for its all-electric Mustang Mach-E SUVs, F-150 Lightning pickups and E-Transit commercial vehicles, Farley said. Ford is “breaking constraints to deliver every one of them as fast as we can.”

Like other auto makers, Ford tried to sidestep chip shortages by allocating the chips on hand to in-demand vehicles such as the Bronco and the Maverick.

Ford Chief Financial Officer John Lawler said Ford expects full-year 2022 adjusted EBIT between $11.5 billion and $12.5 billion, an increase of between 15% and 25% as compared with 2021. Adjusted free cash flow for the year is expected to be between $5.5 billion and $6.5 billion.

Supply constraints will remain “fluid throughout the year, reflecting a variety of factors including semiconductors and COVID,” Lawler told analysts.

“Based on what we see now, we believe our full-year wholesales will be up about 10% to 15% in 2022,” with low double-digit net decline in the first quarter reflecting supplier shortages related to omicron shutdowns and chip issues, he said.

Farley sidestepped a question from an analyst about whether the company would spin off its EV and autonomous-vehicle business or spin off its legacy internal-combustion-engine business.

While describing them as fundamentally different businesses, Farley said “the way we are operating the businesses acknowledges those differences. And I’m really excited about the company’s commitment to operate the businesses as they should be.”

The ICE business is increasingly viewed as “a grouping of passion brands,” Farley said later in the call.

Ford ended the quarter with more than $36 billion in cash and $52 billion in liquidity, which both include its investment in Rivian Automotive Inc. RIVN, -6.16%, which was valued at $10.6 billion at the end of 2021. At the close of trading on Feb. 2, the value was $6.6 billion, reflecting Rivian stock losses.

Ford stock has soared more than 77% in the past 12 months, compared with gains of around 17% for the S&P 500 index SPX, -2.44%.

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