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

Detroit – Ford Motor Investors warned Monday that the company expects to incur an additional $1 billion in costs 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, especially 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 cited recent negotiations that have led to supplier costs associated with inflation nearly $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.

Ford added that executives will “provide more dimensions around the outlook for full-year performance” when it reports third-quarter results on October 26.

Automakers have been grappling with supply chain issues since the coronavirus pandemic halted manufacturing in early 2020. Demand has remained strong despite 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 That supply chain problems will reduce its profit in the second quarter, noting that it has about 95,000 vehicles in its inventory that were manufactured but lack some 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.