Ford Motor Company (NYSE:F) –which celebrates its 118th anniversary today– has found a glimmer of hope in these tough days for the automotive industry, as its adjusted pretax earnings for the second quarter are expected to surpass expectations and be significantly better than a year before.
Q1 2021 hedge fund letters, conferences and more
Ford Stages Second Quarter Comeback
Although net income is believed to be “substantially lower” than Q2 last year, “the improvement in automotive is being driven by lower-than-anticipated costs and favorable market factors,” the company said on Thursday.
“Additionally, higher vehicle auction values are benefitting Ford Credit.” As reported by MarketWatch, Ford shares also jumped 2.4% premarket after their announcement.
Ford CEO Jim Farley will tell attendees at Deutsche Bank’s global automotive industry conference on Thursday that the company is witnessing a positive comeback in its automotive business since providing full-year operating guidance on April 28.
The positive outlook, however, comes up amid growing concerns about the availability of semiconductor chips, which are essential to offering infotainment and driver-assist systems.
Ford is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.
Automotive Industry Surpassing Predictions
As informed by CNBC, Ford was anticipating a 50% loss of its planned second-quarter production due to the worldwide semiconductor shortage that has flooded the automotive market –up from 17% in the first quarter.
In April, the company expected full-year adjusted pretax profits ranging between $5.5 billion and $6.5 billion, with an adverse effect of $2.5 billion stemming from the semiconductor deficit.
“Adjusted free cash flow for the full year was projected to be $500 million to $1.5 billion.” However, 2021 has so far exceeded automakers' expectations, as supply constraints have ended up in higher vehicle prices and profits.
Further, Ford said that customer reservations for four of its new models are particularly robust: 190,000 for the full-size Bronco SUV, 100,000 for the battery-packed F-150 Lightning pickup, 36,000 for the Maverick compact truck, and 20,000 for the E-Transit commercial van.
“We’re providing customers with great value today and there’s much more on the way, because we’re executing Ford+ from strength – with iconic nameplates and leading positions with retail and commercial customers around the world, and the best financing company in our industry in Ford Credit,” Farley said.
Ford’s announcement comes barely a day after General Motors (NYSE:GM) revealed it is expecting adjusted pretax earnings between $8.5 billion and $9.5 billion during the first half of 2021, surpassing a previously estimated $5.5 billion.
