Ford warns investors of an extra $1B in supply chain costs during Q3

2023 Ford F-150 Raptor R


DETROIT – Ford Motor warned investors Monday that the company expects to incur $1 billion in additional costs in the third quarter due to inflation and supply chain issues.

Ford said supply issues have resulted in parts shortages affecting an estimated 40,000 to 45,000 vehicles, mostly high-margin trucks and SUVs, that have not been able to reach dealerships.

The company expects to complete and deliver the vehicles to dealers in the fourth quarter and still expects 2022 adjusted earnings before interest and taxes of $11.5 billion to $12.5 billion.

The company’s shares fell about 5% in extended trading after the update.

Ford said based on recent negotiations, inflation-related supplier costs in the third quarter will be about $1 billion more than initially expected.

The automaker expects third-quarter adjusted earnings before interest and taxes to be between $1.4 billion and $1.7 billion.

The company said executives “will provide more dimension on full-year performance expectations” when the automaker reports its third-quarter results on Oct. 26.

Automakers have been struggling with supply chain issues since the coronavirus pandemic halted manufacturing in early 2020. Demand remained strong, followed by ongoing problems with parts availability, specifically, semiconductor chips.

Ford’s biggest rival, General Motors, announced similar problems earlier this year. GM on July 1 warned investors that supply chain issues would hurt its second-quarter earnings as it had about 95,000 vehicles in its inventory that were made without certain components.

At the time, GM also reconfirmed its guidance for the year, saying it expects “substantially all of these vehicles” to be completed and sold to dealers before the end of 2022.

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