When Ford Motors (NYSE: F) reported $0.89 earnings per share in the previous quarter and topped analysts’ estimates of $0.16, both the company and the analysts are impatiently waiting for the second-quarter results. Based on the company’s previous reporting dates, we are expecting Ford’s Q2 earnings report on July 29
th
. In a similar time frame, we are also expecting the reports from General Motors (NYSE: GM), as well as from Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG), Facebook (NASDAQ: FB) and many more.
Previous expectations and actual results
The American multinational automaker is expecting that its Q2 adjusted earnings (pre-tax) will be above the expectations. Also, this second-quarter results will surpass the results from a year ago, and that is not an immaterial comparison, since the previous Q2 was a true test of resilience and ability how to resume normal operations after the pandemic punch. Ford showed us then that it is more durable than expected when it performed far better than Wall Street predicted and reported an adjusted EPS -$0.35 and automotive revenues of $16.6 billion, while the expected adjusted EPS was -$1.17 and the expected revenues were $ 15.95. So, if the company says it will surpass again this second quarter, and the results will be significantly better than a year before, that means something.
Expected Q2 net income
One of the main points of the second quarter is that the company expects to see substantially lower net income than a year before. The reason for that is the gains from its investment in the self-driving company Argo AI. Let us not forget that in the “pandemic” Q2 of 2020, Ford burned through $5.3 billion and ended that quarter with automotive liquidity of $39.8 billion. During the same quarter, GM burned through $7.8 billion in cash. Like many other automakers, both GM and Ford had to roughly double their automotive debt, so they could get through the Covid crisis. Luckily, this Q2 did not resemble to last year’s.
Current issues & outlook
Even though the pandemic is on a decline in the US, the global shortage of semiconductor chips is making automakers, reduce their initial production plans. Ford has already “lost” around 200.000 units in Q1, and the revised plan for Q2 was 700.000 units, which is around 50% of the originally planned production. This is not a surprise since today’s vehicles are becoming more and more like computers. And since we changed our habits to word from hove a rely more on IT solutions, which are also reliant on semiconductors, there is a supply-demand mismatch, simply said. Hopefully, this gap will be resolved soon!
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