By Dhirendra Tripathi
Investing.com – Ford Motor (NYSE:F) stock was trading 4% higher in Thursday’s premarket as the company raised its forecast for annual profit while promising to move to build-to-order manufacturing to improve profitability.
The maker of Mustang SUVs and F-150 pickup trucks now expects its 2021 adjusted EBIT to be higher by about $3.5 billion, and total between $9 billion and $10 billion. Revenue in the second quarter rose 38% to $26.75 billion, although net profit halved to $553 million.
The company navigated the crippling chip shortage in the second quarter by focusing on higher-margin vehicles and reducing discounts.
Similar factors helped German rival Volkswagen (DE:VOWG_p) to raise its operating margin forecast for the second time in quick succession on Thursday. The world's second-largest automotive group behind Toyota now expects an operating margin of between 6% and 7.5%, some 50 basis points higher than its last estimate.
Shortages of silicon chips, in particular, have held back production at all major carmakers so far this year, with Ford alone falling some 700,000 short of plan due to unscheduled plant closures. Various chipmakers, notably Taiwan Semiconductor Manufacturing, have said they expect the supply of chips to the sector to improve in the second half of the year.
Ford President and Chief Executive Officer Jim Farley told an analyst call “the business is 'spring loaded' for a rebound when semiconductor supplies stabilize and more closely match demand”.