Ford Motor Co. has switched gears on a previously dour financial outlook, saying it now expects stronger second-quarter results thanks to growing demand for its models and a sharp rise in the prices consumer pay for them.
“Our pricing is just strengthening every day,” Chief Executive Officer Jim Farley said Thursday at Deutsche Bank’s automotive conference. “It’s pretty breathtaking actually.”
Ford projects that earnings before interest and taxes in the current quarter will be “significantly better” than last year, when the company lost $1.9 billion on that basis, it said in a statement.
Farley also credited cost cutting, especially in overseas operations that he said had been a “$2 billion to $3 billion drag on our business,” but now turn a small profit. And the automaker is seeing robust demand for its newest models, including a revived Bronco sport utility vehicle, its electric F-150 Lightning pickup and the Maverick compact truck.
Shares rose initially on the improved forecast, but ended the day down 1.7% to close at $14.77 in New York. The stock is up about 68% this year.
Ford had earlier forecast a $2.5 billion hit to earnings this year due to the global semiconductor shortage, which it said would cut second-quarter production in half. But the U.S. auto market has proven more buoyant than expected and vehicle prices have risen as inventories dwindle on dealer lots. The paucity of new vehicles has driven up prices of used cars, which is padding profits at the automaker’s lending arm, Ford Credit.