By Joseph White and Paul Lienert
DETROIT (Reuters) -Ford Motor Co on Wednesday reported better than expected second-quarter net income and reaffirmed its profit outlook for the year, but said management is “actively looking” at how to offset surging costs.
Ford shares were up 4.8% in after-hours trade.
Results were driven by higher-margin vehicles, partially offset by higher commodity costs and expenses, the company said. Ford said it expects commodity costs to rise by $4 billion for the year.
The automaker said nearly all of its 2022 models, including the new F-150 Lightning, are sold out and dealer traffic remains strong. Wholesale shipments to dealers in the quarter were up 35% from the previous year.
“We have not seen a slowdown in the industry,” said Chief Financial Officer John Lawler.
Ford reaffirmed its previous guidance for full-year results, including adjusted earnings before interest and taxes (EBIT) of $11.5 billion to $12.5 billion, up 15% to 25% from last year, and adjusted free cash flow of $5.5 billion to $6.5 billion.
Ford also reiterated its forecast of 10% adjusted EBIT operating margin, including an 8% EBIT margin on its electric vehicles.
Lawler said the automaker is beginning to cut costs across operations, but would not discuss details. “We’re not currently cost competitive,” he told reporters on a conference call. The company’s goal is to reduce costs by $3 billion over several years, he said.
“We’re in much better shape now than at any other time heading into a potential recession,” Lawler said.
Profit increased marginally to $667 million, with diluted earnings per share of 16 cents versus 14 cents a year earlier. Adjusted non-GAAP earnings of 68 cents a share beat consensus of 45 cents and last year’s 13 cents.
Adjusted EBIT of $3.7 billion compared with $1.1 billion in the year-ago quarter.
Ford said revenue for the quarter jumped to $40 billion, up sharply from $26.8 billion a year ago when supply-chain problems slashed production.
Lawler said Ford is prepared for “some moderation in pricing” during the second half of the year, but said demand is still outpacing Ford’s ability to keep pace with production.
(Reporting by Joe White and Paul Lienert in DetroitEditing by Chris Reese and Matthew Lewis)
