DETROIT — Ford Motor Co.’s net income rose 19% in the second quarter as the company gathered enough computer chips to boost factory production and sales.
The Dearborn, Michigan automaker said Wednesday that it earned $667 million between April and June, compared with $561 million a year earlier.
The company maintained its full-year outlook for pretax earnings of $11.5 billion to $12.5 billion and still expects 10% to 15% growth in vehicle sales to dealers for the full year. It also increased its dividend from 10 cents a share to 15 cents a share starting in the third quarter, the level it had before the pandemic.
But Chief Financial Officer John Lawler said the automaker is modeling various scenarios in case the economy slips into a recession. He says Ford is better prepared for a recession than in the past thanks to lower spending and a stronger model lineup.
It is also in the midst of a major business transformation that will include administrative job cuts. Chief Executive Jim Farley told analysts on Wednesday that the company is too complex and its costs are not competitive. It also has too many employees in some areas.
“We have abilities that no longer work,” he said. “We have jobs that need to change.”
The company, he said, has too many versions of its internal combustion vehicles. It plans to build more models from the same EV fundamentals, spending capital in areas that affect customers, such as software, digital screens and automated driving systems, Farley said.
The areas that will see cuts will be decided through reviews of workflows, Farley said.
Ford has realigned itself into three business units, one for electric vehicles, one for commercial vehicles and one for internal combustion vehicles.
Lawler said the company’s factories are still slowed down by a global shortage of computer chips, which he expects to improve in the fourth quarter.
“Given the limitations we have, the demand remains higher than we can supply,” he said.
Ford is also experiencing higher raw material costs and general inflation, which Lawler expects will ease in the second half.
The company is planning for macroeconomic problems, and the next problem will be energy shortages in Europe due to Russia limiting the supply of natural gas. Ford, it said, has 550 parts supply companies in high-risk areas of Europe, of which 130 ship parts to North America.
“I think we’re well prepared for things that we can predict, but it’s always a new day,” he said.
Ford shares rose 6.3% in the secondary market after the earnings report.
From April to June, adjusted earnings per share were 68 cents, beating Wall Street estimates of 45 cents, according to FactSet. Revenue was $40.19 billion, also beating analyst estimates of $36.87 billion.
Sales in the US, Ford’s most profitable market, rose just under 2% in the quarter. That boosted profits when added to strong demand and high prices for trucks and SUVs.
Lawler said Ford’s sales prices were up about 6% last quarter from a year earlier and the company doesn’t see any drop in consumer demand. With average US vehicle sales prices around $45,000, Lawler said there could be some moderation in prices during the second half of the year.