Ford stock suffers worst day since 2011 after cost warning

Ford F-150 Lightning at the 2022 New York Auto Show.

Scott Mlyn | CNBC

ADVICE – Ford Motor’s stocks experienced their worst day in more than 11 years, after carmaker pre-release part of its third quarter earnings report and warn investors of unexpected $1 billion in supplier costs.

Shares of Ford closed Tuesday at $13.09 per person, down 12.3%. The Detroit automaker has lost about $7 billion from its market value.

It was also the stock’s worst day on a percentage basis since January 28, 2011, when the automaker’s fourth-quarter earnings disappointed investors and the stock fell 13.4%. closed at $16.27 per share, according to data compiled by FactSet.

Ford, after the market closes on Monday, said supply problems have resulted in parts shortages affecting between 40,000 and 45,000 vehicles, mostly high-margin trucks and SUVs that do not reach dealers.

Despite the problems and additional costs, Ford confirmed its plan for the year but expects adjusted profit before tax and interest in the third quarter to be in the range of 1.4 billion to 1.7 billion. USD. That number would be significantly lower than the forecasts of some analysts, who expected quarterly profits closer to $3 billion.

Ford cited recent negotiations that resulted in inflation-related supplier costs to be about $1 billion higher than initially expected.

While no major Wall Street analysts downgraded the stock according to the update, some were caught off guard by Ford’s announcement. The expectation is that supply chain problems have been allayed. Furthermore, Ford has recently avoided such problems better than some of its competitors.

Goldman Sachs analyst Mark Delaney said his company was “surprised by the announcement ahead of the third quarter given the progress Ford had previously made on supply chain bottlenecks.”

BofA Securities analyst John Murphy echoed those sentiments in a note to investors on Tuesday: “Ultimately, this news is somewhat surprising given the broader macro news suggests that the supply chain has gotten better over the past few months.”

Some analysts have questioned whether this is a Ford-specific problem or a red flag for other auto industry problems.

GM CEO Mary Barra on Tuesday told CNBC that the company’s supply chain problems have been tempered.

“We are seeing the situation improve,” Barra said. “We keep working, solving problems, finding efficiency like a normal course, and we will continue to do that.”

Barra said GM is on track to complete about 95,000 vehicles in stock by the end of the year that are built without certain components due to supply chain issues. In July, GM warned investors that supply chain problems would severely affect the company’s second-quarter earnings, while similarly maintains its guidelines for 2022.

Ford said its unfinished vehicles are expected to be completed and shipped to dealers in the fourth quarter.

In response to Tuesday’s drop, Ford spokesman TR Reid said the company continues to work on its Ford+ restructuring plan.

“Markets are efficient over time,” he said. “We’ve got a great plan at Ford+ to create value for our customers, investors and other stakeholders over time. Our obligation is to work against it and create it. that chance.”

Ford shares are down more than 36% year-over-year so far this year, but are still up about 2% over the past 12 months.

– by CNBC Christopher Hayes and Michael Bloom contributed to this report.

Ford shares fall after company warns of additional costs of $1 billion

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