Ford misses on profit, pulls 2023 outlook after strike deal
FORD Motor said it fell short of third-quarter earnings expectations, citing higher costs and lower quality, a day after it won labour peace through a tentative contract with the United Auto Workers (UAW).
With the six-week strike resolved pending a ratification vote by the union membership, Ford pulled its forecast of adjusted earnings before interest and taxes in a range of US$11 billion to US$12 billion, which it had boosted in July. Crosstown rival General Motors, which still has not settled with the UAW, likewise suspended its 2023 guidance.
“We were negatively impacted by the strike and our cost and quality remain a drag on our business,” chief executive officer Jim Farley said on a conference call with analysts.
The union’s work stoppage, which began on Sep 15, cost the company US$100 million in the third quarter and a total of US$1.3 billion so far, John Lawler, Ford’s chief financial officer, said. Ford’s deal with the UAW will add an additional US$850-US$950 per vehicle, he said, shaving margins by 60 to 70 basis points.
“We going to have to find efficiencies and productivity throughout the system and throughout the company to help mitigate the impacts,” Lawler said.
Shares of the company fell 4.4 per cent in postmarket trading to US$10.85 as at 5.24 pm in New York. The stock closed on Thursday (Oct 26) up about 3 per cent this year.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The Dearborn, Michigan-based carmaker posted adjusted earnings per share Thursday of 39 US cents, below the 47 US cents analysts estimated on average. Ford’s revenue in the third quarter of US$43.8 billion, was better than the US$41 billion analysts expected.
“It’s been a challenging situation for us, but our business is never short of challenges,” Farley said of the strike, calling Ford’s performance in the quarter “mixed”.
Quality-issue hold
One reason for that muted assessment: Ford has some 50,000 vehicles on hold due to quality-related issues in the third quarter, CFO Lawler told reporters.
The carmaker’s traditional internal combustion engine unit, known as Ford Blue, saw third-quarter earnings before interest and taxes of US$1.72 billion, below analysts’ average forecast of US$1.94 billion. That came despite a 7.7 per cent increase in US vehicle sales in the quarter, led by models such as the Bronco SUV and F-150 pickup truck.
The carmaker’s struggles in its nascent electric vehicle (EV) business, known as Model e, resulted in a loss before interest and taxes of US$1.33 billion, more than the US$1.27 billion loss analysts expected.
Sales of Ford’s signature EV, the F-150 Lightning, plunged 46 per cent in the quarter as the company shut its factory for expansion, delayed delivery of trucks for “quality checks” and temporarily laid off workers at the plant for what the company called “multiple constraints”.
Ford’s commercial business, known as Ford Pro, posted earnings before interest and taxes of US$1.65 billion, undershooting the US$2.16 billion analysts expected. That unit has seen growth in selling software services to help fleet owners better manage their vehicles, a business Ford sees growing up to 1,000 per cent over the next few years. BLOOMBERG
Share with us your feedback on BT's products and services
