Ford expects to lose 50% of Q2 production due to chip shortage
Phil LeBeau joins ‘Closing Bell’ to report Ford’s quarterly results. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
Ford Motor beat Wall Street’s expectations for the first quarter but warned an ongoing semiconductor chip shortage would worsen before it gets better.
The company said Wednesday it now expects to lose about 50% of its planned second-quarter production, up from 17% in the first quarter. The increase is largely due to a fire at a chip supplier for Ford in Japan, according to the automaker.
Ford CFO John Lawler provided some optimism regarding the situation, saying the company believes that the semiconductor issue will bottom out during the second quarter, with improvement through the remainder of the year.
Shares of Ford were down about 3% during afterhours trading. The company’s market cap is more than $48 billion.
Here’s how Ford did compared with what Wall Street expected based on average estimates compiled by Refinitiv.
Adjusted earnings: 89 cents versus an expected 21 cents Automotive revenue: $33.55 billion versus $32.23 billion The chip shortage has led automakers to shutter factories for varying periods of time across the globe, leading to tight vehicle inventories on dealer lots. However, the lower supplies have led to higher profits per vehicle, allowing automakers to continue to perform well despite the shortage.
Ford said Wednesday its full-year adjusted pretax profit to be between $5.5 billion and $6.5 billion, including an adverse effect of about $2.5 billion from the semiconductor issue. Adjusted free cash flow for the full year is projected to be $500 million to $1.5 billion.
The company had estimated it would earn between $8 billion and $9 billion in adjusted pretax profits in February. That didn’t factor in the shortage in semiconductor chips, which the automaker has publicly said could lower earnings by $1 billion to $2.5 billion this year.
The chip shortage is expected to cost the global auto industry $60.6 billion in revenue, according to consulting firm AlixPartners.
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