Ford Beats Earning Expectations Despite Factory Closings

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Automakers such as Ford have been struggling ever since the COVID-19 pandemic began. While at first there were disruptions to supply chains, the company also saw the closing of many of its factories due to the pandemic. Despite these setbacks and potential future ones, the company beat both Wall Street and their own expectations with its second-quarter earnings report.

The report revealed that the company was profitable and reported fewer operational losses than were expected. Ford had also managed to begin repaying credit lines taken out earlier in the year to help offset the drastic financial impact of the pandemic.

Wall Street investors had expected Ford to report a loss of $1.17 per share for their adjusted earnings per share and a total of $15.95 billion in automotive revenue. Instead, the company had a 35-cent loss per share and $16.6 billion in automotive revenue. Ford also reported an adjusted pretax loss of $1.9 billion, compared to the potential $5 billion loss CFO Tim Stone warned investors about back in April.

Stone claimed that a faster turnaround in sales due to factors like favorable pricing, along with “operational execution”, played a large role in the company’s second-quarter performance. If conditions remain favorable without any production delays, then Stone expects the company to achieve an adjusted pretax profit of between $500 million and $1.5 billion for the third quarter.

However, the second quarter also had Ford burn through $5.3 billion in cash, a $2.2 billion increase from the first quarter. The company reported that it had liquidity of $39.8 billion by the end of the second quarter. Still, this is better than contemporaries such as General Motors, which burned through nearly $8 billion in cash. Both companies doubled their automotive debt to $30 billion during the first quarter to help offset COVID-related issues.