Ford overcame the effects of the chip shortage to post a narrow profit in the second quarter, and said it expects much better times in the second half of this year.
Ford earned net income of $561 million in the quarter, about half of what it earned a year earlier despite the impact of he pandemic, which shut down many of its factories and dealerships during that period.
Analysts had forecast that the companywould report a narrow second quarter loss as it struggled with the impact of the computer chip shortage, which is causing problems throughout the auto industry. Despite strong demand for cars and trucks from consumers, Ford and most other automakers were forced to shut factories once again this quarter due to the lack of chip needed to build their vehicles.
In April Ford warned that it expected to lose about 50% of its planned second-quarter production from the chip shortage, which would cost it about $2.5 billion over the course of the year. But on Wednesday the company said the lost production was not as bad as feared, and it now expects full-year adjusted earnings before interest and taxes to come to between $9 billion to $10 billion, well above the $5.5 billion to $6.5 billion range it was projecting just three months ago.
Ford’s quarterly profit was a surprise even for the company’s top management.
“I can tell you this outcome was far from certain at the beginning of the quarter,” said Ford CEO Jim Farley. He added that Ford’s business is “spring loaded” for a rebound when semiconductor supplies stabilize.
The shortage of both new and used car inventory caused by the chip shortage and strong demand from car buyers has driven both new and used car prices to record highs. But automakers sell vehicles to their dealers, who are independently owned businesses, at set wholesale prices, so the dealerships have been the big winners from high prices more than the automakers.
Shares of Ford rose 2% in after-hours trading following the report.
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