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News >  Business

Ford crushes profit estimates ahead of cuts to fund EV shift

July 28, 2022 Updated Thu., July 28, 2022 at 5:45 p.m.

The 2022 Ford F-150 Lightning XLT has been very popular with consumers.  (Tribune News Service )
The 2022 Ford F-150 Lightning XLT has been very popular with consumers. (Tribune News Service )
By Keith Naughton Bloomberg News

Ford Motor Co., preparing to slash thousands of staffers to help fund its electric-vehicle future, reported second-quarter earnings that beat Wall Street estimates, as sales grew and car prices increased.

Its shares rose 3.8% in early trading Thursday.

Adjusted earnings rose to 68 cents a share, more than the 45 cents analysts predicted on average, Ford said Wednesday.

Adjusted earnings before interest and taxes more than tripled to $3.7 billion, well above the $2.37 billion analysts expected.

That performance also compared favorably with Detroit-based rival General Motors Co.’s second-quarter adjusted profit of $2.34 billion.

Both carmakers are racing to catch up with EV market leader Tesla Inc. by launching a slew of battery-powered models.

Ford attributed its gains in part to high demand for its electric Mustang Mach-E crossover SUV, F-150 Lightning pickup and E-Transit commercial van.

Ford also reiterated its 2022 earnings guidance of $11.5 billion to $12.5 billion before interest and taxes.

That would represent a gain of 15% to 25% over 2021’s profit.

In another sign of confidence, the company raised its quarterly dividend by 50% to 15 cents a share.

Ford shares pared a gain on Thursday of as much as 6.8% to trade up 3.8% to $13.69 as of 9:46 a.m. in New York. The stock is down about 34% this year.

Belt-tightening

Ford also signaled belt-tightening is underway to keep costs in check as it spends billions on EV battery and vehicle factories.

Ford Chief Financial Officer John Lawler said Ford has begun streamlining efforts as part of a “sweeping change” in strategy to make the transition to electric vehicles.

He declined to comment on specifics about headcount reductions.

“We’re focused on our costs and our cost reductions for transforming the company and those will have benefits if we do head into a potential recession,” Lawler said on a call with reporters.

“We’re looking at simplifying the business, transforming the business, growing in some areas, cutting in other areas.”

Chief Executive Officer Jim Farley is engineering a wrenching transformation by spending $50 billion through 2026 to pump out 2 million electric vehicles annually, up from just over 27,000 last year.

To finance those ambitions, Farley aims to lift profit from Ford’s traditional gas-burners, like the Bronco sport-utility vehicle, by cutting $3 billion in costs and eliminating as many as 8,000 jobs, according to people familiar with the plans.

During the second quarter, the automaker bucked an industrywide decline by nudging up U.S. sales by 1.8%.

Ford’s automotive revenue in the period soared to $37.9 billion, beating the $34.5 billion analysts expected, as vehicle prices increased.

Ford attributed its robust revenue to increased sales volume as well as “favorable pricing and vehicle mix,” a reference to higher sticker prices on its fattest profit-margin SUVs and trucks.

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