Ford Q2 FY 2021 Earnings Preview: Key Insights & U.S. Truck Sales Impact Amid Chip Shortage

Spotlight on Ford's U.S. Truck Sales Performance

Highlights to Watch

• Analysts forecast an adjusted EPS of -$0.10 for Q2 FY 2021, improving from -$0.35 in Q2 FY 2020.
• Ford’s U.S. truck sales experienced a year-over-year decline during Q2.
• Company-wide revenue is projected to grow at its fastest pace in over four years, rebounding from pandemic-related setbacks.

Under CEO Jim Farley’s leadership since October, Ford Motor Co. (F) is positioning itself for a turnaround. The automaker has revamped key models, including the electric Mustang Mach-E and the flagship F-150 pickup. With a $30 billion investment plan to boost electric vehicle production, Ford is aiming for innovation-driven growth. However, the ongoing global semiconductor shortage continues to disrupt production schedules across multiple plants, posing significant profitability challenges.

Investors will scrutinize Ford’s strategies to navigate these hurdles as the company reports Q2 FY 2021 earnings after market close on July 28, 2021. While adjusted earnings per share are expected to return to negative territory—marking the first loss since Q2 FY 2020—revenue is anticipated to surge at its strongest rate in at least 16 quarters.

Another critical focus is Ford’s total U.S. truck sales, a highly lucrative segment for the company. Although Ford has not released specific Q2 truck sales figures, available data indicates a near 1% decline year-over-year. Truck sales, encompassing models like the F-150, Ranger, and Super Duty, generally yield higher profit margins compared to smaller vehicles. Ford has strategically shifted emphasis toward these profitable trucks and SUVs in recent years.

After a volatile period from July to October 2020, Ford’s stock has rallied impressively through July 2021, despite some fluctuations. Following the Q1 FY 2021 earnings release in April, shares briefly dipped before surging into June. Although the stock has eased since, it still outperforms the broader market, delivering a one-year total return of 97.8%, compared to 35.3% for the S&P 500 as of July 27.

Ford's Earnings & Revenue Trends

Ford recorded negative adjusted EPS in Q1 and Q2 FY 2020 amid the pandemic's onset but rebounded with three consecutive profitable quarters thereafter. Adjusted EPS surged 93% in Q3 FY 2020 and 191.8% in Q4 FY 2020, with a profit also in Q1 FY 2021 compared to a prior-year loss. Analysts now project a modest loss of -$0.10 per share for Q2 FY 2021, significantly improved from the previous year’s figure.

Revenue trends have been uneven, with six straight quarters of year-over-year declines starting Q1 FY 2019. The steepest drop, over 50%, occurred in Q2 FY 2020. Since then, revenue has shown mixed results—growing in Q3 FY 2020 and Q1 FY 2021 but falling 9.5% in Q4 FY 2020. For Q2 FY 2021, revenue is expected to jump 27.6% year-over-year, marking the strongest quarterly growth in four years.

Source: Visible Alpha; Ford Motor Co.

Critical Metric: U.S. Truck Sales

Ford’s truck segment, including light-, medium-, and heavy-duty models like the F-150 series, Ranger, and Super Duty, remains vital due to its higher profit margins. The company has strategically pivoted toward these vehicles to enhance profitability. However, the pandemic and semiconductor shortages have caused fluctuations in truck sales, with a notable 27% year-over-year decline in June 2021 alone.

Despite this steep drop in June, the overall Q2 FY 2021 U.S. truck sales decline was more moderate. Investors will closely analyze whether June’s sharp downturn signals deeper challenges ahead or represents a temporary anomaly as Ford navigates supply chain constraints.

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