Ford shares have biggest daily drop since 2011 after inflation warning

Ford shares have biggest daily drop since 2011 after inflation warning

The Ford logo is displayed at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany. REUTERS/Wolfgang Rattay

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Sept 20 (Reuters) – Ford Motor Co (FN) shares fell more than 12% on Tuesday in their deepest one-day drop in more than a decade after the automaker said costs related to inflation would be $1 billion more than expected in the current quarter and that parts shortages had delayed deliveries.

The stock finished at $13.09, making its percentage drop for the session the largest since January 2011.

Ford’s preliminary third-quarter results, released late Monday, sent shares of rival General Motors Co fell 5.6% as analysts said automakers could take longer to recover from chip shortages.

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“It appears that across the industry, chip and component shortages may be improving at a slower pace than anticipated,” said Emmanuel Rosner, an analyst at Deutsche Bank.

In July, Ford said it expected raw material costs to rise $4 billion for the year. read more

The Detroit automaker’s warning comes less than a week after delivery company FedEx Corp (FDX.N) withdrew its financial forecast due to slowing global demand. read more

Ford’s inflation woes and weak FedEx demand highlight the fix the Federal Reserve is in ahead of the US central bank’s policy-making meeting on Wednesday.

The Fed is widely expected to raise rates by 75 basis points in its battle against decades-high inflation. His aggressive monetary policy campaign has battered the US stock market in recent weeks, with investors fearing the Fed’s actions could hurt the economy.

Ford also estimated that it would have 40,000 to 45,000 vehicles in inventory without parts.

Ford, which will report third-quarter results on Oct. 26, affirmed 2022 adjusted earnings before interest and taxes forecast of $11.5 billion to $12.5 billion.

It was unclear whether the supply of chips and parts will be normalized by the end of the year, Deutsche Bank’s Rosner said.

Ford shares fell 37% in 2022, well above the 19% decline in the S&P 500 (.SPX).

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Reporting from Kannaki Deka in Bengaluru and Noel Randewich in Oakland, California; Edited by Shounak Dasgupta, Richard Chang, and David Gregory

Our standards: the Thomson Reuters Trust Principles.

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