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Ford warns investors of an extra $1B in supply chain costs during Q3 & More Breaking News

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DETROIT – Ford Motor on Monday warned investors that the company expects to incur an extra $1 billion in costs during the third quarter due to inflation and supply chain issues.

Ford said supply problems have resulted in parts shortages affecting roughly 40,000 to 45,000 vehicles, primarily high-margin trucks and SUVs that haven’t been able to reach dealers.

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

Shares of the company fell about 5% in extended trading following the update.

Ford cited recent negotiations resulting in inflation-related supplier costs that will run about $1 billion higher than originally expected.

The automaker anticipates third-quarter adjusted earnings before interest and taxes to be in the range of $1.4 billion to $1.7 billion.

Ford added that executives will “provide more dimension about expectations for full-year performance” when it reports its third-quarter results on Oct. 26.

Automakers have been battling supply chain problems since the coronavirus pandemic brought manufacturing to a standstill in early 2020. Demand continued to be strong despite ongoing issues with the availability of parts, specifically, semiconductor chips.

Ford’s largest crosstown rival, General Motors, announced similar issues earlier this year. GM on July 1 warned investors that supply chain issues would dent its second-quarter earnings, noting it had about 95,000 vehicles in its inventory that were manufactured but lacked some components.

GM at the time also reconfirmed its yearly guidance and said it expects that “substantially all of these vehicles” will be completed and sold to dealers before the end of 2022.

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