Ford’s ‘massive’ first-quarter defeat was overshadowed by headwinds from chip shortages

<div id=”js-article__body” itemprop=”articleBody” data-sbid=”WP-MKTW-0000250811″>

Shares of Ford Motor Co. fell the furthest Thursday in more than 10 months after the company had its best quarter in years, but it spooked investors by calling for huge success and more production cuts due to a shortage of chips in course. Shares of Ford F, -9.90% fell more than 10% in midday trading, on track for their lowest close since Feb.3 and the biggest one-day percentage gain since June 11, 2020.

Ford reported a “massive” hit in the first quarter Wednesday night, with adjusted earnings per share of 89 cents, four times Wall Street‘s expectation, on sales that also beat forecasts and benefited from tight investors and higher growth. demand for the company’s new products. and redesigned vehicles. “Ford presented very strong (first quarter) results, but also confusing updated guidance for 2021 as Street may have underestimated the magnitude” of the chip shortage for the rest of the year, said Joseph Spak, analyst at RBC Capital, in a note. Ford projected Adjusted EBIT for full year 2021 between $ 5.5 billion and $ 6.5 billion, from a previous perspective of between $ 8 billion and $ 9 billion, including a $ 2.5 billion impact from chip shortages. , on top of an impact previously estimated between $ 1 billion and $ 2.5 billion earlier this year. He also asked for more production cuts. Ford’s new outlook “is ALL headwinds, NOT tailwinds,” especially amid a combination of vehicles and prices unique in a decade, Chris McNally of Evercore ISI said in his note. Furthermore, it appears that while the first quarter made all the benefits of the sales mix, the second quarter will bear “the full weight of the tailwinds,” he said. Adam Jonas with Morgan Stanley echoed some of that concern, saying Ford’s first quarter was “too ‘too good’ to extrapolate, while the remainder of the year is ‘too challenged’ to extrapolate.” The year 2021 is likely to become a “strange” time for the auto industry due to the confluence of consumer strength, inventory shortages and “extremely disruptive” supply chain issues, he said. Benchmark analyst Michael Ward was more blunt: Ford’s guidance “doesn’t make sense.” First-quarter earnings were $ 2 billion higher than expected, despite a 17% reduction in production related to the supply of chips. “What doesn’t seem to make sense, in our opinion, is the reduction of $ 4 billion in the company’s guidance for the rest of the year. Either the impact of the chip is much greater than the company’s estimated $ 2.5 billion or the structural gains, especially in North America, are much lower than previous assumptions, ”they said. Ford shares rose 28% this year, outpacing the SPX12% advance of the S&P 500 index in the same period. It has doubled in the last 12 months, compared to gains of around 43% for the S&P. Ford shares are down nearly 70% from their closing record of $ 36.53 in 1999.