© Reuters. FILE PHOTO: The Ford logo is pictured at the 2019 IAA in Frankfurt, Germany, September 10, 2019. REUTERS/Wolfgang Rattay/Archive photo
By Paul Lienert and Nathan Gomes
DETROIT (Reuters) – Ford Motor on Thursday withdrew its full-year earnings forecast due to “uncertainty” over the impending ratification of its agreement with the United Auto Workers (UAW) union and warned of continued pressure on electric vehicles, pulling shares back from Das The company lost more than 4% in after-hours trading.
The union and Ford (NYSE:) reached a tentative agreement Wednesday that would provide a 25 percent wage increase for 57,000 workers over four and a half years, ending a strike at some of the automaker’s largest factories.
Ford expects the new contract to increase labor costs per vehicle by $850 to $900, Chief Financial Officer John Lawler said in a briefing Thursday.
The company’s concessions are significant, CFRA research analyst Garrett Nelson said in an investor note on Thursday. “They will weigh on margins and hurt the company’s ability to compete compared to Tesla (NASDAQ:) and other non-union automakers.”
Ford’s increasing concerns about slowing demand for electric vehicles follows rival General Motors’ (NYSE:) decision earlier this week to postpone a $4 billion electric truck plant in Michigan.
Lawler reiterated that Ford would postpone some of its planned multibillion-dollar investments in new electric vehicle and battery production capacity, citing “tremendous downward pressure” on prices.
Ford lost an estimated $36,000 on each of the 36,000 electric vehicles it delivered to dealers in the quarter – even more than the estimated $32,350 loss per electric vehicle in the second quarter.
During Ford’s second-quarter earnings call in July, Chief Executive Jim Farley said the company would slow its expansion of loss-making electric vehicles, shift investments to Ford’s commercial vehicle division and outline plans to quadruple sales of gas-electric hybrids over the next year five years.
Like many of its competitors, Ford is trying to “find the balance between price, margin and demand for electric vehicles,” Lawler said Thursday. For consumers, Farley added, “affordability is an issue.”
GM also withdrew its 2023 earnings forecast earlier this week and walked back its oft-repeated expectation of building 400,000 electric vehicles by mid-2024.
Ford’s third-quarter adjusted earnings per share of 39 cents missed Wall Street’s average target of 45 cents, according to LSEG data.
Sales excluding Ford Credit were $41.18 billion, slightly below Wall Street forecasts of $41.22 billion, according to LSEG data.
Ford said its EV division posted a $1.3 billion loss in earnings before interest and taxes, widening its nine-month EBIT loss to $3.1 billion. The company had forecast a full-year pretax loss of $4.5 billion for the Ford Model E unit.
The automaker said its electric vehicle business was experiencing “severe declines” in prices and profitability and said customers were unwilling to pay a premium for electric vehicles over comparable combustion and hybrid models.
Ford posted a third-quarter profit of $1.2 billion, compared with a loss of $827 million a year earlier. Last year’s loss included a $2.7 billion non-cash writedown on Ford’s investment in the now-closed Argo automated vehicle business.
The automaker said both its Ford Pro commercial vehicle business and its Ford Blue combustion and hybrid vehicle business reported higher year-over-year sales, EBIT and EBIT margins. Vehicle sales to dealers in both units were lower than a year ago.
Adjusted free cash flow fell to $1.2 billion from $3.6 billion a year ago.
Source : www.investing.com