Shares of Ford Motor Co. fell. more than 5% in Monday’s extended session after the company said inflation and parts shortages will leave it with more unfinished vehicles than expected, a reminder that Wall Street’s supply chain snags are far from over since for car makers.
He said he expects 40,000 to 45,000 vehicles in inventory at the end of the third quarter “that are currently missing some parts.”
The automaker also said that based on its recent negotiations, payments to suppliers will run about $1 billion higher than expected for the quarter, due to inflation. However, the company reiterated its outlook for the year.
“Ford’s warning is evidence that auto parts shortages and supply chain issues are still ongoing,” CFRA analyst Garrett Nelson told MarketWatch.
Many investors had believed that “these problems were in the rearview mirror and inventories were starting to recover from record lows in the year or so,” Nelson said.
The unfinished vehicles include high-demand, high-margin models of popular trucks and SUVs, Ford said. It will cause some shipments and revenues to shift to the fourth quarter.
“Ironically, Ford may be a victim of its own success in that its recent US sales growth has been better than peers,” Nelson said. His performance in the third quarter apparently “couldn’t keep up with the demand.”
Ford reiterated full-year 2022 adjusted earnings expectations before interest and taxes of between $11.5 billion and $12.5 billion, despite the shortages and higher payments to suppliers, he said.
Ford called for third-quarter adjusted EBIT of between $1.4 billion and $1.7 billion.
Ford shares ended the regular trading day up 1.4%. The company has embarked on a reorganization to pivot to electric vehicles, and last month confirmed layoffs in relation to its new structure.
Ford is scheduled to report third-quarter financial results on Oct. 26, when it said it expects to “provide more on expectations for full-year performance.”
Analysts polled by FactSet expect the automaker to report adjusted earnings of 51 cents a share, which would be in line with third-quarter 2021 adjusted EPS, on revenue of $38.8 billion.
The quarterly sales would have compared to $35.7 billion in revenue in the year-ago period.
Ford shares have lost 28% so far this year, compared with 18% losses for the S&P 500 SPX index,
The news comes a week after FedEx Corp. FDX,
very large markets and raised fears of an economic slowdown by withdrawing its outlook for the year and warning that the year is likely to get worse for business.