Ford Motor mentioned on Wednesday that the global shortage of computer chips will take a better toll on its enterprise than beforehand anticipated and would probably lower its automobile manufacturing within the second quarter by about half.
“The results of the scarcity have grown,” Ford’s chief monetary officer, John Lawler, mentioned throughout a convention name with reporters. “We now count on the semiconductor scarcity to worsen and backside out within the second quarter however proceed to place strain on our working ends in the second half of the yr.”
Ford expects the shortage to decrease its working revenue this yr by $2.5 billion, to between $5.5 billion to $6.5 billion. It had beforehand mentioned the impression of the scarcity could be between $1 billion to $2.5 billion.
The scarcity was exacerbated in March by a fireplace at a plant owned by a Japanese electronics provider, Renesas.
The grim outlook was delivered as a part of a robust earnings report by Ford. The corporate made a $3.3 billion revenue within the first quarter, a turnaround from a yr in the past when the corporate misplaced $2 billion because the coronavirus pandemic was beginning to shut down a lot of the world’s economic system.
“There’s no query, we’re changing into a stronger, extra resilient firm,” Ford’s chief govt, James Farley, mentioned in an announcement.
The scarcity of laptop chips has compelled automakers to idle factories world wide. Ford mentioned it produced about 200,000 fewer automobiles than initially deliberate within the first quarter. However the ability to command higher prices helped Ford’s backside line, as did decrease guarantee prices and a $900 million achieve associated to its stake in Rivian, an electrical automobile start-up.
Whereas it hopes to have the ability to make up a number of the misplaced manufacturing later within the yr, Ford will probably produce 1.1 million fewer automobiles in 2021 than it had deliberate to, Mr. Lawler mentioned.
Ford has been attempting to streamline its operations and lift its earnings for a number of years with modest success till now. In 2020, it named Mr. Farley to the highest job, charging him with accelerating the turnaround.
The automaker has developed automobiles that would revitalize earnings. It redesigned its F-150 pickup truck, the top-selling automobile in the US. It has additionally gotten robust opinions for a brand new Bronco sport-utility automobile and the Mustang Mach E, an electrical S.U.V. styled to resemble the corporate’s well-known sports activities automobile.
However the chip scarcity has crimped its plans. Within the first three months of the yr, Ford has needed to pause or gradual manufacturing at a wide range of crops, together with some that make the F-150, which generates a big chunk of its earnings.