On Wednesday, Ford Motor Company revealed second-quarter net profits that were higher than expected.
Positive Outlook for the Auto Company
Sales of SUVs and crossovers bearing the Ford brand increased by 8% year over year in the second quarter, driving a 1.8% increase in Ford's U.S. sales compared to the same period last year. Despite persistent supply chain issues, the manufacturer was able to produce more models for its U.S. dealers than it did a year ago, according to the report by CNET.
Nearly all of the automaker's 2022 vehicles, including the new F-150 Lightning, are already sold out, and dealer traffic is still quite strong. Reuters, noted that in comparison to the prior year, its wholesale shipments to dealers increased by 35% during the quarter.
As a result of being able to supply more products to customers, the company reported its adjusted operating income to $3.7 billion, which is more than tripled from a year ago.
Compared to the second quarter of 2021, Ford's net income increased to $667 million from $561 million.
Revenue from the automotive market increased to $37.91 billion from $24.13 billion in the second quarter of 2021. CNET pointed out that analysts had only projected an average of $34.32 billion.
Meanwhile, as a result of supply chain improvements and a more profitable mix of products produced, Ford reported that its adjusted earnings before interest and tax (EBIT), increased to $3.7 billion from $1.1 billion a year earlier.
Furthermore, adjusted earnings per share for the automaker are 68 cents, up from 12 cents in the second quarter of 2021.
Additionally, Ford reaffirmed that it would raise its quarterly dividend to 15 cents per share. CNET, on the other hand, noted that after the news was announced, shares increased by more than 6% in extended trading.
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Challenges in the Auto Industry
While it is true that Ford had a solid profit in the second quarter, the company claimed that these gains were somewhat offset by inflation.
Ford is also undergoing a significant reorganization that includes increasing resources for electric vehicles (EVs) and cutting $3 billion in annual costs from its internal combustion engine (ICE) development activities.
"Cost reduction will happen in our ICE business," Chief Executive Jim Farley said (via Reuters), adding that: "We are planning much less complexity in our Blue (combustion vehicle) business."
But he said that the company would discuss the specifics of its cost-cutting measures on its own timeline.
Meanwhile, Reuters noted that Farley remained silent about rumors that Ford would cut up to 8,000 people, mostly in its Ford Blue unit.
The economic issues also have an impact on businesses than Ford.
Ford is not the only company that is being affected by the economy. It was recently reported that 840 of Rivian's 14,000 employees received layoff notices on Wednesday. RJ Scaringe, the company's founder and CEO, claimed that a number of issues, including inflation, rising interest rates, and rising commodity prices, contributed to the decision to implement layoffs in the company.
Related Article: Ford Will Reportedly Lay Off 8,000 Employees in Order to Fund EV Expansion
