Ford Motor Co. missed Wall Street analysts' expectations for its fourth-quarter financial results despite a profitable year overall, but executives expressed optimism about the trajectory the company is on for 2022 as it sees strong demand for its burgeoning portfolio of all-electric vehicles.
The Dearborn automaker booked $17.9 billion in profit on $136.3 billion in revenue in 2021, the company reported Thursday, bolstered by $9.1 billion in gains on its investment in electric-vehicle startup Rivian and despite supply-chain issues that dragged down auto production last year. The results compare to a $1.3 billion loss on $127.1 billion in revenue in 2020.
"Financial performance is obviously critical," CEO Jim Farley said in a statement. “We’re also proud that customers see how Ford is taking EVs mainstream, and have already ordered or reserved more than 275,000 all-electric Mustang Mach-E SUVs, F-150 Lightning pickups and E-Transit commercial vehicles — and we’re breaking constraints to deliver every one of them as fast as we can.”
Meanwhile, chief financial officer John Lawler said the company is "bullish about 2022" despite uncertainty about supply-chain disruptions that cost Ford 250,000 units of lost production last year. This year, Ford expects global volumes to increase between 10% and 15% and for adjusted earnings before interest and taxes to grow 15% to 25% to between $11.5 billion and $12.5 billion — potentially putting the automaker on track to hit profit margin targets for the company and North America a year earlier than expected.
He said the company expects supply-chain issues to persist through the first quarter but to improve throughout the year, especially in the second half. And underpinning the optimistic outlook for the year, the company also expects pricing and mix to remain strong.
Lawler attributed Ford's fourth-quarter results coming in lower than analysts' expectations in part to its inability to boost production volumes because of the global semiconductor shortage — which on Thursday prompted Ford to schedule downtime at two of its U.S. plants — and other constraints.
“You have to look forward," he said. “We have incredible demand for our products; it’s the supply chains that limited what we could produce and what we could provide. ... The momentum is there and that’s why we’re bullish on 2022.”
Ford ended 2021 as the No. 2 seller of EVs in the U.S., behind market leader Tesla Inc., an achievement Farley described as “an important early step toward eventually being the true EV leader.” The company has said it aims to boost EV manufacturing capacity to at least 600,000 units by 2023 and it's targeting at least 40% of its lineup being fully electric by decade's end. Rival General Motors Co. said Tuesday that it plans to deliver 400,000 EVs in North America through next year.
“You’ve seen how capable Ford is when it comes to scaling manufacturing. And we’re using that know-how and resolve to break production constraints on our must-have EVs, including doubling worldwide BEV manufacturing capacity to at least 600,000 units by the end of 2023," Lawler said Thursday.
Still, he underscored that Ford's profitable lineup of gas-powered SUVs and trucks will underpin that growth: “We really see the ICE (internal combustion engine) business as a strategic advantage as we go forward, and as we manage that and continue to improve that business and generate significant amounts of cash flow, we’ll leverage that and invest in the growth business with our BEVs.”
As Ford works to ramp up production capacity to meet demand for its first lineup of EVs, executives said Thursday the company is working on its second generation of all-electric vehicles. Farley noted the automaker's planned plant in Tennessee "will produce Ford's second generation of a full-size electric pickup in high volumes starting in 2025."
"The velocity of change at Ford is increasing," he told analysts. "We’re not seeking half-measures. Fear of change and risk has never served legacy automakers well in the past couple decades. We’re done with incremental change. We have a clear plan, a bias for action and a whatever-it-takes mindset.”
GM CEO Mary Barra on Tuesday also said the Detroit automaker is pulling ahead "significant investment into the 2022 to 2025 timeframe."
Asked about GM's plans to accelerate its EV spending, Lawler said the focus on how much each automaker is spending to develop EVs "misses a key point. We're spending enough money on electrification. We’re spending enough money on connectivity. And we might spend more. The real question is, how we’re spending that money. We're going after scale.”
GM on Tuesday reported it booked net income of $10 billion in 2021 on revenue of $127 billion. The automaker also met its 2021 projected guidance of $14 billion in adjusted EBIT. In 2022, the automaker is forecasting income in the range of $9.4 billion to $10.8 billion and adjusted earnings to be in a range of $13 billion to $15 billion. Stellantis NV reports its full-year earnings Feb. 23.
Meanwhile, Ford reported that adjusted EBIT for 2021 was $10 billion, within the guidance range of $9.6 billion to $10.6 billion the automaker provided during its last financial report. In the fourth quarter, the company booked $12.3 billion in profit on revenue of $37.7 billion.
In North America, Ford's biggest and most lucrative market, the automaker netted nearly $7.4 billion in adjusted earnings and hit an 8.4% EBIT margin for the year. Last year, the automaker posted losses in South America, Europe and China. In the other international markets where it operates, it posted $622 million in adjusted EBIT.
Ford ended the quarter with more than $36 billion in cash and $52 billion in liquidity, including its stake in Rivian, which was valued at $10.6 billion at the end of 2021 and $6.6 billion as of Wednesday.
Last month, Ford said it would record the gains on its investment in Rivian as a special item, meaning it's reflected in the automaker's net income but not in its adjusted EBIT. Ford gained $8.2 billion on that investment in the fourth quarter, and $900 million in the first quarter.
Shares in the Dearborn automaker were trading down more than 4% in after-hours trading after results were released Thursday. The stock closed at $19.89 a share.
Investment research firm CFRA Research on Thursday lowered its 12-month target on Ford's stock by $2 to $30 and reiterated its buy opinion.
"We remain bullish on Ford under the direction of CEO Jim Farley, seeing both EPS (earnings per share) growth and multiple expansion driving shares higher as EV sales grow and the stock is valued less like a low-multiple legacy automaker," CFRA Research vice president Garrett Nelson wrote in a note.
