Ford Motor Company has said that strong customer demand for its fresh lineup of vehicles in the first quarter of 2022 was tempered by persistent supply chain issues that reduced the speed with which the company could fulfill demand.
“The appeal of these products – Bronco, Bronco Sport, Maverick, Mustang Mach-E, E-Transit and now the F-150 Lightning – is undeniable,” said CEO Jim Farley. “That’s translating into orders, typically with rich configurations that deliver great experiences to those customers and healthy pricing for us. “Now, we’re breaking constraints wherever they exist to get more Ford vehicles – including our innovative EVs – to more customers as quickly as possible.”
The company has committed to reaching worldwide EV manufacturing capacity of at least 600,000 by the end of 2023, for which it’s ramping up battery supplies, on the way to making more than two million EVs annually by the end of 2026. In the most recent quarter, the continuing global shortage of semiconductors held down Ford’s January and February production and shipments, though manufacturing rates were significantly improved during March.
The company entered the second quarter with what Farley called an “extremely healthy” order bank. Ford reported $34.5 billion in first-quarter revenue, with wholesale shipments of nearly 970,000 vehicles, down 9 percent from a year ago. A net loss of $3.1 billion was primarily attributable to a mark-to-market loss of $5.4 billion on the company’s investment in Rivian. Adjusted earnings before interest and taxes were $2.3 billion, with an adjusted EBIT margin of 6.7 percent .
Profitability was enhanced by increased net pricing, including continued discipline in incentive spending, but more than offset by higher commodity prices, a decline in overall product shipments, and a lower mix of pickup trucks and large SUVs.
The company again ended the quarter with strong total company cash and liquidity – nearly $29 billion and $45 billion, respectively. Both of those numbers included Ford’s stake in Rivian, which was valued at $5.1 billion on March 31, down from $10.6 billion at the end of 2021.
In North America, Ford generated $1.6 billion in EBIT. The company said first-quarter supply disruptions limited the fundamental revenue and earnings power of the regional business. Collectively, the company’s Europe, South America, China and International Markets Group business units – all of which have been restructured and refocused over the past few years – produced EBIT of $300 million.
Ford in Europe generated positive EBIT despite supply related lower volumes. The company sustained its seven-year standing as the region’s No. 1 brand of commercial vehicles. The FORDLiive connected-uptime system, introduced in Europe a year ago, collectively provided customers with about 66,000 more days of uptime from their vehicles in the first quarter of 2022 alone – an example of the powerful services value Ford Pro will deliver to enterprises in markets around the world.
Ford’s business in South America reflected the benefits of its restructuring into a lower-risk, asset-light business, achieving a third straight quarter of profitability. Introductions of the Maverick and Ranger FX4 pickup trucks are expected to be highly popular with existing and new customers in the region.
In China, Ford continues to establish the Lincoln brand with buyers of luxury vehicles and as the company’s long-term profit engine in the strategically important market. The brand’s incountry customer experience and dealer network are being modernised and expanded in preparation for Lincoln’s all-electric future.
IMG remained solidly profitable, even with a 33 percent decrease in first-quarter wholesales that was mostly because of restructuring in India and the effects of semiconductor and other supply constraints on production elsewhere in the business. Customers in IMG countries are anticipating the launch of the next-generation Ranger pickup later this year.
Ford Credit delivered another strong quarter, with earnings before taxes of $928 million. During the quarter, same-day approval and pre-arranged financing options for smaller commercial customers were introduced to the unit’s evolving range of services.
Farley said the company has identified and is tackling a variety of key competitive issues holding back profitability and growth. “There are big things that we do extremely well, like turning out high-demand vehicles at scale,” said Farley.
“And others, in both existing and aspirational areas, where we need to improve – and will.” Several of those areas for improvement prompted the decision, announced March 2, to clearly define and assign priorities, make the most of existing strengths, and build new strategic muscle by creating separate automotive businesses within Ford:
• Ford Blue, a critical source of growth, profitability and liquidity from an enhanced and optimized portfolio of iconic internal-combustion vehicles
• Ford Model e, to rapidly develop and market innovative connected, electric vehicles and digital services, the latter shared across all of the company’s product lines, and
• Ford Pro, helping commercial customers transform their enterprises with tailored ICE and electric vehicles and services.