Ford posts profit but warns that chip shortage will cut production in half in second quarter

Ford CEO Jim Farley
Ford again sounded the alarm about the chip shortage’s impact on its business.

  • Ford on Wednesday reported a strong quarterly profit for the first quarter of 2021.
  • The carmaker said it will build 50% fewer vehicles in the second quarter due to a chip shortage.
  • Ford said the supply-chain issue could cost it $2.5 billion in 2021.
  • See more stories on Insider’s business page.

Ford on Wednesday reported a strong quarterly profit, but warned that the global semiconductor chip shortage will slash production in the second quarter by 50% before bottoming out and then improving through the year.

The automaker said the global semiconductor shortage would cost it about $2.5 billion in 2021. The company said its annual production will drop by roughly 1.1 million units due to the shortage.

Shares were down 3.3% in after-hours trading on Wednesday.

Ford said its net income of $3.3 billion was the best since 2011, and adjusted pre-tax profit was a record $4.8 billion. Ford lost $2.0 billion in the first quarter of 2020.

Read more: Ford’s global business chief explains how it’s spending $6 billion to create US jobs in an EV-focused future

The company said the chip shortage will slash full-year earnings before interest and taxes to $5.5 billion-$6.5 billion.

In February, Chief Financial Officer John Lawler said the company was on course to earn $8 billion to $9 billion in adjusted EBIT, including a $900 million noncash gain on its investment in Rivian, the electric vehicle startup.

Revenue in the quarter increase to $36.2 billion, from $34.3 billion a year earlier.

Ford was able to offset some of the impact of lost production in this year’s quarter by boosting average transaction price per vehicle sold to nearly $48,000, compared to just over $44,000 a year ago, according to research firm Edmunds.com.

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