Ford Motor Co. reported $2.3 billion in earnings before interest and taxes — with a decline of 41% or $1.6 billion — for the first three months of this year, a dramatic contrast to one year ago when the company had a gain of $3.9 billion.
The company saw a net loss of $3.1 billion compared with a $3.3 billion net income in 2021, primarily attributable to the value of its investment in the startup electric vehicle maker Rivian, Ford said.
Ford reported $34.5 billion in revenue compared with $36.2 billion in 2021.
By contrast, General Motors reported on Tuesday a quarterly net profit of $2.9 billion, compared with $3 billion in the year-ago first quarter. Its earnings before interest and taxes dipped to $4 billion compared with $4.4 billion a year ago. Net revenue rose to $36 billion compared with $32.5 billion.
Ford ended the quarter with $29 billion in cash on hand and $45 billion in liquidity.
"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," Ford said in a news release Wednesday.
A year ago, Ford had $31 billion in cash on hand and $47 billion in liquidity.
Ford Chief Financial Officer John Lawler called the company performance "mixed" during a call with reporters.
Semiconductor chip availability has continued to disrupt production, and it hit products in North America "disproportionately" on large vehicles including F-Series, Expedition and the Navigator, he said.
Can do better
"The capacity of this business is much stronger than we were able to provide in the quarter," Lawler said. "We're working to unlock those issues. ... We still expect volumes to increase."
From a pricing standpoint, Ford has been able to offset inflationary pressures and commodity costs with strong pricing, Lawler said, adding that the company doesn't see dramatic price increases in the near term.
"We're also going to execute better," he said. "It comes back to the pent-up demand. We have close to 400,000 units (vehicles) in our order bank coming out of March. Demand is really strong."
The existing order bank has an estimated value of $17 billion in revenue, Lawler said.
New company restructuring will also contribute favorably to the bottom line, he said.
"Demand for our products last quarter exceeded our ability to produce them," Lawler said. "We didn't have enough chips to build enough vehicles our customers wanted and couldn't take advantage of our manufacturing capacity."
Ford plans to build more than 2 million vehicles by the end of 2026.
"The stakes for the transformation are high and so are our ambitions," Lawler said.
He highlighted earnings before interest and taxes outside North America of $300 million for the quarter, down from $454 million a year ago.
Meanwhile, Ford Credit saw earnings of $928 million, compared with $962 million for the same quarter in 2021.
'What we have learned'
Ford CEO Jim Farley told industry analysts in an earnings call Wednesday, "We're putting in place the right organization," referring to an overhaul that separated the money-making gas-powered operation into Ford Blue and the future products into Ford Model e.
He referred to the effort to "build new strategic muscles" that includes shoring up materials including battery supplies. Farley said, "We're in good shape in the near term."
Ford is closing its "talent gap" in key areas and continued "aggressive" recruiting for technology development. They're working on chemistry to ease dependence on materials including nickel.
The company is seeing its appeal grow among younger, higher educated buyers in California and New York with early orders for the electric 2022 F-150 Lightning, he said.
Farley said the company is focusing on electrifying light duty trucks and lower end of Super Duty vehicles but not the F-250 or F-350 or F-450.ENDNU
"That’s a whole different ball of wax. They require a lot of payload, heavy batteries," he said. "That doesn’t make sense."
While Ford will continue to invest in its internal combustion engine business "in targeted ways" that spotlight F-Series, Bronco, Super Duty "and a few others," the primary focus will be on saving money by improving quality, Farley said.
Recalls not only create a drag on the business but also annoy customers, Ford executives said. The automaker continues to see an opportunity for $1 billion to $2 billion in warranty cost reductions, analysts were told. While Ford slashed $1.4 billion in warranty costs in 2021, there was "deterioration" in the first quarter this year, the company said.
"We continued to be hampered on recalls," Farley said. "We must do more to improve."
Free Press staff writer Jamie L. LaReau contributed to this report.
This article originally appeared on Detroit Free Press: Ford Q1 earnings drop 41% as production slammed by supply chain issues