Shares of Ford Motor Co. fell more than 4% in extended trading on Monday after the company said inflation and parts shortages will leave it with more unfinished vehicles than it expected, recalling that the drawbacks of Wall Street’s supply chain is far from over for automakers.
It said it expects to have 40,000 to 45,000 vehicles in inventory at the end of the third quarter “that are missing certain parts that are currently in short supply.”
The automaker also said that based on its recent negotiations, supplier payments will be about $1 billion higher than expected for the quarter, thanks to inflation. However, the company reaffirmed its outlook for the year.
Ford’s warning “is evidence that auto parts shortages and supply chain issues still persist,” CFRA analyst Garrett Nelson told MarketWatch.
Many investors had begun to believe that “these issues were in the rearview mirror with inventories starting to recover from the record lows of the last year or so,” Nelson said.
Unfinished vehicles include popular high-demand, high-margin truck and SUV models, Ford said. That will push some shipments and revenue into the fourth quarter.
“Ironically, Ford may have become a victim of its own success in that its recent US sales growth has outpaced its peers by a wide margin,” Nelson said. Its third-quarter production “apparently couldn’t keep up with demand.”
Ford reiterated full-year 2022 adjusted earnings before interest and tax expectations of between $11.5 billion and $12.5 billion, despite shortages and higher payments to suppliers, it said.
Ford requested third-quarter adjusted EBIT of between $1.4 billion and $1.7 billion.
Ford shares ended the regular trading day 1.4% higher. The company embarked on a reorganization to move to electric vehicles and last month confirmed layoffs in connection with its new structure.
Ford is scheduled to report third-quarter financial results on October 26, when it said it hopes to “provide more dimension on expectations for full-year performance.”
Analysts surveyed by FactSet expect the automaker to report adjusted earnings of 51 cents per share, which would match third-quarter 2021 adjusted EPS, on revenue of $38.8 billion.
Quarterly sales would compare with $35.7 billion in revenue in the same period a year ago.
Ford shares fell 4.4% after hours and have lost 28% so far this year, compared to 18% losses for the S&P 500 SPX Index.
The news comes a week after FedEx Corp. FDX,
rattled markets and raised fears of an economic slowdown by withdrawing its outlook for the year and warning that the year was likely to get worse for business.