Ford warns investors of an additional $1 billion in supply chain costs in the third quarter

Detroit – Ford Motor Investors warned Monday that the company expects to incur $1 billion more in costs than previously expected during the third quarter due to inflation and supply chain issues.

Ford said supply problems led to a shortage of parts that affected approximately 40,000 to 45,000 vehicles, largely high-margin trucks and SUVs, that were unable to reach dealers.

The company expects the vehicles to be completed and delivered to dealers in the fourth quarter and still forecasts 2022 adjusted EBIT of between $11.5 billion to $12.5 billion.

The company’s shares are down about 5% in extended trading after the update.

Ford said that based on recent negotiations, supplier costs associated with inflation during the third quarter will be about $1 billion higher than originally expected.

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

The company said executives will “provide more dimensions around the outlook for full-year performance” when the automaker reports its third-quarter results on October 26.

Automakers have been grappling with supply chain issues since the coronavirus pandemic brought manufacturing to a halt in early 2020. Demand continued to be strong, followed by persistent issues with parts availability, specifically semiconductor chips.

Ford’s crosstown biggest competitor, General motorsSimilar issues were announced earlier this year. GM on July 1 Investors warn Supply chain issues will affect its earnings in the second quarter, as it had about 95,000 vehicles in its inventory that were manufactured without certain components.

GM also at the time reaffirmed its annual guidance and said it expected “pretty much all of these vehicles” to be completed and sold to dealers before the end of 2022.