Ford warns of ‘significantly’ higher costs in Q3

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on Sep 20, 2022
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  • Ford warns of an extra $1.0 billion in inflation-related supplier costs this quarter.
  • The legacy automaker left its full-year guidance for adjusted EBIT unchanged.
  • Shares of the car manufacturer are down over 40% versus the start of 2022.

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Ford Motor Company (NYSE: F) slid roughly 5.0% in extended trading after the legacy automaker said costs in its current financial quarter will be significantly higher than its previous estimate.

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What will drive the additional cost?

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The car manufacturer warned of an extra $1.0 billion in inflation-related supplier costs. Up to 45,000 vehicles, it added, were not delivered this quarter due to parts shortage.

The supply shortages will result in a higher-than-planned number of vehicles on wheels built but remaining in Ford’s inventory awaiting needed parts, at the end of the third quarter.

Ford Motor now expects these vehicles, mostly high-margin SUVs and Trucks, to reach dealers in Q4. It, however, left its guidance for $11.5 billion to $12.5 billion in full year adjusted EBIT unchanged this evening.

Wall Street recommends that you buy Ford shares as they have upside to $16.61 on average.

When is Ford reporting its Q3 results?

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In July, Ford reported market-beating results for its second financial quarter. The next quarterly update is expected on October 26th when it will offer further insight into what it expects for fiscal 2022 as a whole.

For the current quarter, it forecasts $1.40 billion to $1.70 billion in earnings before interests and taxes on an adjusted basis. The announcement arrives more than a month after rival General Motors issued a similar warning as well.

Last week, Ford revealed the 7th generation of its iconic Mustang sports car. The stock is currently down more than 40% for the year.

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