Ford stock drops more than 4% as supply costs to jump by $1 billion, parts shortages to leave more cars unfinished

Ford Motor Co. shares fell more than 4% in Monday’s extended session after the company said inflation and parts shortages would leave it with more unfinished vehicles than it had expected, a reminder that Wall Street’s supply chain issues are far from over for automakers.

Ford F,
+1.43%
said it expects to have between 40,000 and 45,000 vehicles in stock at the end of the third quarter “missing some parts that are currently in short supply.”

The automaker also said that based on its recent negotiations, payments to suppliers would be about $1 billion higher than forecast for the quarter, thanks to inflation. The company, however, reaffirmed its outlook for the year.

Ford’s warning “is proof that auto parts shortages and supply chain issues are still with us,” CFRA analyst Garrett Nelson told MarketWatch.

Many investors had begun to believe “those issues were in the rearview mirror as stocks began to recover from last year’s record highs,” Nelson said.

Unfinished vehicles include popular high-demand, high-margin truck and SUV models, Ford said. This will cause some shipments and revenue to shift to the fourth quarter.

“Ironically, Ford may have been a victim of its own success as its recent US sales growth has far outpaced its peers,” Nelson said. Its third-quarter production “apparently was unable to keep pace with demand.”

Ford reiterated expectations for full-year 2022 adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion, despite shortages and higher payments to suppliers, it said. he declares.

Ford called for third-quarter adjusted EBIT of between $1.4 billion and $1.7 billion.

Ford shares ended the regular trading day up 1.4%. The company has embarked on a reorganization to switch to electric vehicles, and layoffs confirmed last month under its new structure.

Ford is expected to release its third-quarter financial results on Oct. 26, when it said it expects to “provide more dimension on full-year performance expectations.”

Analysts polled by FactSet expect the automaker to report adjusted earnings of 51 cents per share, which would match third-quarter 2021 adjusted EPS, on revenue of $38.8 billion.

Quarterly sales would compare to $35.7 billion in revenue the previous year.

Ford shares slid 4.4% after hours and are down 28% so far this year, compared to losses of 18% for the S&P 500 SPX index,
+0.69%.

The news comes a week after FedEx Corp. FDX,
+1.17%
choppy markets and raising fears of an economic slowdown by withdrawing its outlook for the year and warning that the year was likely to get worse for the company.

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