Ford sees inflation raising quarterly supply costs $1 billion

Ford sees inflation raising quarterly supply costs  billion

Written by David Shepardson

(Reuters) – Ford Motor Co. said on Monday that supplier costs related to inflation will be about $1 billion higher than expected in the current quarter and it estimates it will have 40,000 to 45,000 vehicles in stock that lack parts, delaying sales.

Ford shares were down 4.4% to $14.27 in after-hours trading.

The No. 2 US automaker has reaffirmed its full-year 2022 adjusted EBIT forecast of $11.5 billion to $12.5 billion โ€œdespite restrictions on the availability of certain parts as well as higher payments to suppliers to account for the effects of inflation.โ€

“Based on recent negotiations, supplier costs associated with inflation during the third quarter will be about $1 billion higher than originally expected,” Ford said.

The automaker said an unspecified spare parts supply shortage will result in a larger-than-expected number of vehicles manufactured but remaining in stock. Ford said it believes 40,000 to 45,000 vehicles “will be completed and sold to dealers during the fourth quarter.”

These vehicles are largely “high-margin trucks and SUVs,” Ford said.

Ford said it expects third-quarter adjusted EBIT to be between $1.4 billion and $1.7 billion. Ford declined to reveal what parts the cars lacked.

Ford said in July that its second-quarter results were driven by higher profit-margin vehicles, offset in part by higher commodity costs and expenses. Ford then said it expected commodity costs to rise by $4 billion for this year and added that management was “actively looking” at how to offset the higher costs.

Ford said in July it was facing ongoing supply chain disruptions.

READ ALSO :   DocuSign stock drops 4% after Morgan Stanley downgraded to Underweight

โ€œSuppliers have been working non-stop during COVID … we are seeing the output of stress in the supply chain,โ€ said John Lawler, Ford’s chief financial officer.

Automakers have faced a series of supply chain issues over the past two years that have repeatedly delayed production of cars, often due to a shortage of semiconductor chips.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

The Latest

To Top