Ford warns investors of an extra $1 billion in supply chain costs during the third quarter

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  • Ford Motor on Monday warned investors that the company expects to incur additional costs of $1 billion in the third quarter due to inflation and supply chain problems.
  • Ford said supply problems had led to a shortage of parts for about 40,000 to 45,000 vehicles, mostly high-margin trucks and SUVs, that couldn’t reach dealers.
  • The automaker reiterated its full-year guidance, saying it expects to deliver cars to dealers in the fourth quarter.

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DETROIT. Ford Motor warned investors on Monday that the company expects additional $1 billion in spending in the third quarter due to inflation and supply chain issues.

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Ford said supply problems had led to a shortage of parts for about 40,000 to 45,000 vehicles, mostly high-margin trucks and SUVs, that couldn’t reach dealers.

The company expects to complete and deliver vehicles to dealers in the fourth quarter and still projects 2022 adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion.

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The company’s shares fell about 5% in extended trading after the update.

Ford cited recent talks that would see suppliers’ inflation-related costs rise by about $1 billion higher than originally expected.

The automaker expects third-quarter adjusted earnings before interest and taxes to be between $1.4 billion and $1.7 billion.

Ford added that executives “will provide more information about full-year results expectations” when the company reports third-quarter results on October 26.

Automakers have been grappling with supply chain issues since the coronavirus pandemic halted production in early 2020. Demand remained strong despite constant problems with the availability of spare parts, in particular, semiconductor chips.

Ford’s biggest competitor, General Motors, announced similar issues earlier this year. On July 1, GM warned investors that supply chain problems would impact its second-quarter earnings, noting that it had about 95,000 vehicles in its inventory that were built but were missing some components.

GM at the time also reaffirmed its full-year guidance and said it expects “virtually all of these vehicles” to be completed and sold to dealers before the end of 2022.

Credit: www.cnbc.com /

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