Ford warns that inflation is a $1 billion problem

Ford Motor Co. said inflation is pushing up supplier costs by $1 billion more than expected in the current quarter, joining a chorus of major corporations warning about macro challenges affecting the economy.

The automaker expects adjusted earnings before interest and taxes in the range of $1.4 billion to $1.7 billion when it reports results next month. The preliminary estimate is well below the $3.7 billion in adjusted EBIT that Ford reported last quarter and the $3 billion it earned a year ago. Shortages of key parts will also keep its inventory of half-completed vehicles high, according to a statement on Monday.

Ford shares fell as much as 4.8% to $14.21 in premarket trading in New York on Tuesday. Shares were down 28% this year through Monday’s close.

The manufacturer is the latest household name to cite economic pressures weighing on operations. From FedEx Corp. to General Electric Co. through McDonald’s Corp., companies point to declining demand, stubborn supply chain problems and the growing possibility of a recession.

Ford now expects the number of partially built vehicles – which it described as “largely high-margin trucks and SUVs” – to be around 40,000 to 45,000 by the end of the third quarter, which ends on September 30. He expressed confidence. which could complete and sell these vehicles by the end of the year.

Ford said it still expects to earn between $11.5 billion and $12.5 billion for the full year, unchanged from its previous forecast. The company will “provide more dimension” on its financial expectations for 2022 alongside its quarterly earnings report on October 26.

Still, the inventory problem shows that automakers continue to struggle with ongoing parts shortages. Ford’s latest comments echo those of rival General Motors Co., which said in July it was trying to reduce its inventory of partially finished vehicles, which had swelled amid tight semiconductor supplies.

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