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Ford shares fell more than 4% as supply costs increased by $1 billion, a lack of parts left many cars unfinished

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 expected, prompting supply chain difficulties. Wall Street is far from over for automakers.

Ford
F,
+ 1.43%

said it expected to have between 40,000 and 45,000 vehicles in inventory by the end of the third quarter “currently lacking certain parts.”

The automaker also said that based on its recent negotiations, payments to suppliers will be about $1 billion higher than expected in the quarter due to inflation. However, the company has reaffirmed its outlook this year.

Ford’s warning “is evidence that auto parts shortages and supply chain problems are continuing,” CFRA analyst Garrett Nelson told MarketWatch.

Many investors are beginning to believe that “these problems are in the rearview mirror with inventories starting to recover from last year’s record lows or so,” Nelson said.

Unfinished vehicles include high-demand, high-margin SUVs and trucks, Ford said. That should cause some shipments and revenue to move into the fourth quarter.

“Ironically, Ford may have fallen victim to its own success as its recent U.S. sales growth has outperformed its peers,” Nelson said. Its third-quarter production “can’t seem to keep up with demand.”

Ford reiterated its expectations for full-year 2022 adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion, despite shortfalls and higher supplier payments.

Ford has called for an adjusted EBIT for the third quarter of between $1.4 billion and $1.7 billion.

Shares of Ford ended the normal trading day up 1.4%. The company embarked on a reorganization to move towards electric vehicles, and Last month confirmed the layoff regarding its new structure.

Ford is expected to report third-quarter financial results on October 26, when it said it hopes to “provide additional dimension in expectations for full-year performance.”

Analysts polled by FactSet expect the automaker to report adjusted earnings of 51 cents per share, or adjusted EPS for the third quarter of 2021, on revenue of $38.8 billion. USD.

Quarterly revenue will compare with revenue of $35.7 billion in the year-ago period.

Shares of Ford fell 4.4% in a few hours and have lost 28% so far this year, compared with an 18% loss for the S&P 500 index.
SPX,
+0.69%
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The news comes a week after FedEx Corp.
FDX,
+ 1.17%

market turmoil and raised fears of a recession by withdrawing its outlook for the year and warning that the year is likely to turn out to be worse for the business.

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