Ford inventory drops more than 5% as delivery costs rise $1 billion, parts shortages to leave more cars unfinished

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The shares of Ford Motor Co. were down more than 5% during Monday’s extended session after the automaker confirmed its outlook for the year, but said inflation and parts shortages will leave the company with more unfinished vehicles than it expected.

FordF,
+1.43%
said it expects to have between 40,000 and 45,000 vehicles in stock by the end of the third quarter “with certain parts missing that are currently in short supply.”

The automaker also said that based on recent negotiations, payments to suppliers will be about $1 billion higher than expected for the quarter, due to inflation.

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The unfinished vehicles include high-demand, high-margin models of popular trucks and SUVs, the company said. As a result, part of the turnover is shifting to the fourth quarter.

Ford reaffirmed expectations of full-year 2022 adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion, despite deficits and higher payments to suppliers, it said.

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

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Shares of Ford ended the regular trading day up 1.4%. The company has embarked on a reorganization to switch to electric vehicles and confirmed layoffs last month in connection with its new structure.

Ford plans to release its third quarter financial results on October 26, when it said it expects to “add more dimension to expectations for full-year performance.”

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

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Quarterly revenue would be comparable to revenue of $35.7 billion in the same period a year ago.

Shares of Ford have lost 28% so far this year, compared to losses of 18% for the S&P 500 index SPX,
+0.69%.

The news comes a week after FedEx Corp. FDX,
+1.17%
stirred markets and raised fears of an economic slowdown by retracting the outlook for the year and warning that the year was likely to get worse for the company.

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