Ford Motor warned on the third quarter late Monday, citing incomplete vehicles and spiraling costs amid chip and other parts shortages. Ford stock tumbled Tuesday.
The auto giant indicated, after the market close Monday, that Q3 earnings will be far lower than expected as supply problems persist. But Ford maintained full-year guidance, expecting to complete and sell the partially built vehicles in Q4.
At the same time, Ford expects $1 billion more in supply costs than it had foreseen, due to inflation in input prices. Its news release Monday cited recent negotiations with suppliers.
Supply Chain, Inflation To Hit Ford Earnings
The partial earnings pre-release surprised Wall Street. Supply chains were thought to be improving. And some analysts had viewed Ford as weathering the semiconductor shortages somewhat better than General Motors of late.
In a note to clients Tuesday, Deutsche Bank analyst Emmanuel Rosner flagged the unexpected $1 billion in inflation-related supply costs. Even with delivery volumes and revenue shifting to Q4, Rosner wondered "how the company plans to offset the extra costs" to maintain guidance for the full year.
Joseph Spak, an analyst at RBC Capital Market, said Ford's full-year 2022 outlook implies a big step-up quarter over quarter, leaving "a large gap we need to understand."
Ford Stock Dives, Undercuts Key Level
Ford stock plunged 12.4% to 13.08 on the stock market today, hitting its lowest level since late July. Ford stock fell back below the 50-day moving average, after rebounding from that key support level Monday.
GM stock sank 5.6% to 39.07 Tuesday. GM stock rallied 3.6% on Monday, nearing its 200-day line.
On Tuesday, General Motors announced an agreement to sell up to 175,000 electric vehicles to Hertz Global over the next five years.
Thousands Of Ford SUVs, Trucks Delayed
In Monday's news release, Ford projected it will have 40,000-45,000 vehicles in inventory at the end of the current third quarter, awaiting parts needed for completion.
The inventoried vehicles mostly comprise its high-demand, high-margin trucks and SUVs. Ford said that it expects to complete and sell those vehicles in Q4.
As a result, Ford sees some Q3 revenue and earnings shifting to the final quarter of 2022.
It now anticipates Q3 adjusted earnings before interest and taxes (EBIT) of $1.4 billion-$1.7 billion, far below Wall Street consensus of $2.98 billion. The company still expects 2022 adjusted EBIT of $11.5 billion-$12.5 billion.
Ford is scheduled to report for Q3 on Oct. 26. The partial Ford earnings pre-announcement Monday follows a profit warning from FedEx Sept. 16.
With Tuesday's tumble, Ford stock has given up all the gains since its earnings gap-up July 28.
