Ford Q4 net income surges to $12.3 billion on Rivian investment gain

DETROIT — Ford Motor Co. posted a $12.3 billion profit in the fourth-quarter and finished 2021 with its best financial performance since 2016 despite ongoing production constraints that stymied sales volumes and disappointed Wall Street investors.

Executives predict increased profits and volumes in 2022 as the automaker expands its EV portfolio in a bid to challenge Tesla’s dominance.  

“We’re done with incremental change,” CEO Jim Farley said Thursday on an earnings call. “We have a clear plan, a bias for action and a whatever-it-takes mindset.”

Ford’s fourth-quarter net income, up from a $2.8 billion loss a year earlier, included a $8.2 billion gain from the automaker’s investment in Rivian, the EV maker that went public in November, though Ford was in the black for the quarter even without that and other one-time items.

Ford reported fourth-quarter adjusted earnings of $2 billion before interest and taxes, a 19 percent increase from the same period a year earlier.

Revenue in the quarter rose 5 percent to $37.7 billion.

For the full year, the automaker reported net income of $17.9 billion, up from the $1.3 billion loss it incurred in 2020, the first year of the coronavirus pandemic. It posted adjusted EBIT for 2021 of $10 billion, roughly four times its 2020 earnings on that basis and in line with its estimates after it reclassified a first-quarter Rivian investment gain. Coupled with an EBIT margin of 7.3 percent, CFO John Lawler said it was Ford’s strongest performance since 2016.

Ford’s full-year earnings included a $7.4 billion profit in North America. Under its contract with the UAW, workers will receive profit-sharing checks of $7,377 on average in the coming weeks. The North America performance was Ford’s best since 2017.

The automaker lost money in every other region except the International Markets Group, where it made $622 million.

Ford on Thursday projected that its adjusted EBIT would rise between 15 percent and 25 percent in 2022, to a range of $11.5 billion to $12.5 billion. It expects volumes to increase between 10 and 15 percent.

CFO John Lawler said the high end of that EBIT range would imply an adjusted-EBIT margin of 8 percent, including 10 percent in North America. If Ford hits that target, it would be a year ahead of schedule.

Ford’s shares slipped 9.7 percent to close at $17.96 on Friday.

Lawler attributed the tepid Wall Street response to a disappointment its volumes weren’t higher.

“Some thought we could do much better on the volumes,” he said. “But due to the supply constraints we realized due to omicron and semiconductor shortages, we weren’t able to exceed the volumes we had guided.”

Still, he said the company was in a strong position.

“Look at where we’re guiding in 2022,” he said. “It shows the strength and the momentum of the business.”

Ford plans this year to launch the E-Transit electric van as well as the F-150 Lightning, and executives Thursday said they’re focused on scaling those products and improving costs to boost profits.

“Our BEV margins are not where we intend them to be,” Lawler said. “We’re not going to chase top hats, we’re going to look at scale. We’re going to want to have a strong lineup where we can lean into it with key vehicles in high volume segments…and we’re going to reduce complexity.”

Farley said Ford has a team dedicated to reducing cost from the bill of material for EVs and was recently able to reduce Mustang Mach-E costs by $1,000.

He said Ford plans to ratchet up to about 100,000 Mach-Es in 2022, and in 2023 will work toward building 150,000 F-150 Lightnings.

“We under-called the demand for our first wave of EVs,” Farley said, noting the company has doubled its planned EV capacity to 600,000 per year.

Ford, however, has no plans to curb production of its gasoline-powered vehicles.

“We continue to see a lot of opportunity in the ICE business,” said Lawler, who called it a “strategic advantage.”

Farley noted the company would increasingly focus its ICE business around products with passionate owners, like Bronco SUVs or Mustang sports cars.

Ford ended the year with more than $36 billion in cash and $52 billion in liquidity, which Lawler said would help it implement changes as it evolves its business.

“That cash is going to be able to fund our growth,” he said.