Ford’s Rivian investment drags down Q1 earnings, and supply-chain challenges remain


Ford Motor Co. reported on Wednesday afternoon the results of the first quarter within the expectations of Wall Street, saying that the strong demand for its vehicles was tempered by the “persistent” challenges of the supply chain that limited the capacity of the manufacturer of cars to fulfill your orders.

“We’re still struggling with persistent supply chain issues that prevented us from posting an even stronger quarter,” CEO Jim Farley told analysts in a call after the results. “We are working to break down the limitations as long as they exist.”

Ford F,
+ 0.95%
it said it lost $ 3.1 billion, or 78 cents a share, in the first quarter, in contrast to gains of $ 3.3 billion, or 81 cents a share, in the quarter last year.

Adjusted for specific items, including losses related to Ford’s investment in electric vehicle manufacturer Rivian Automotive Inc. RIVN,
+ 1.76%,
the company earned 38 cents per share.

Revenue fell to $ 34.5 billion from $ 36.2 billion a year ago, Ford said.

Analysts polled by FactSet expected the company to report adjusted earnings of 37 cents per share with revenue of $ 34.5 billion.

Shares rose about 2% during the extended session on Wednesday, after ending the trading day with 1%.

Ford executives declined to talk about what would be next for the investment and whether the carmaker would retain some or all of its stake in the startup, whose shares have lost nearly 70% in what it’s been a year.

As for vehicle prices, this has so far offset inflationary pressures, although commodity inflation is expected to continue, CFO John Lawler said in the call.

Many of the car dealerships sell vehicles near or above the MSRP, Lawler said. Ford will be “as aggressive as we can” in prices if commodity prices continue to rise, he said.

CEO Farley said the F-150 Lightning, the electric version of Ford’s best-selling van, is appealing to younger buyers in states like New York and California, where “we don’t normally sell full-size trucks.” Overall, demand for Ford electric vehicles is “extremely” high, he said.

Ford reiterated its focus on an adjusted EBIT for this year of $ 11.5 billion to $ 12.5 billion, thanks to “strong demand and the price environment” of its new and existing vehicles, he said. The company set the adjusted free cash flow for the year at $ 5.5 billion to $ 6.5 billion.

With F-150 Lightning deliveries expected to begin soon and a “favorable view” of Ford under Farley, “the stock remains one of our best car choices,” said Garrett Nelson of CFRA at a note Wednesday afternoon.

Ford surprised markets in March with the decision to split into two different car businesses, one focused on electric vehicles and dubbed the Ford Model e.

The other focuses on cars with internal combustion engines, and is called Ford Blue. The units were joined by Ford Pro, the automaker’s commercial vehicle unit.

When asked on Wednesday how employees had reacted to the separation, Farley said the reaction had been “great”.

“We were prepared … we knew what we needed to communicate with employees,” Farley said.

Shares of Ford have lost more than 28% so far this year, compared to losses of about 12% in the S&P 500 index. SPX,
+ 0.21%



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