Ford Motor Co.
Ford Iw Image 636d12c015da5

Inflation to add $1 billion to Ford’s Q3 supplier costs

Nov. 10, 2022
The automaker also says ongoing parts shortages will push some shipments into the fourth quarter.

Ford Motor Co. executives on Sept. 19 said they will pay suppliers $1 billion more than previously expected during the third quarter after concluding some recent negotiations. The company also is pushing some vehicle deliveries into the fourth quarter because of ongoing parts shortages, but its leaders are sticking to their full-year pre-tax earnings forecast.

The inflation update from Michigan-based Ford comes after CEO Jim Farley and CFO John Lawler in July added $1 billion to their forecast for 2022 inflationary factors aside from commodity costs, pushing it to $3 billion. In a short statement Sept. 19, the company did not provide more details about this latest increase.

See also: Ford unbridles new Super Duty at Churchill Downs

Shares of Ford (Ticker: F) fell more than 4% in after-hours trading to about $14.25. Over the past six months, they are now down nearly 15%, trimming the company’s market capitalization to about $58 billion.

Despite this latest cost forecast hike, Farley and Lawler affirmed their full-year forecast for adjusted earnings before interest and taxes, which they expect to come in between $11.5 billion and $12.5 billion. For the third quarter, that number is expected to be $1.4 billion to $1.7 billion, up from $1.1 billion in Q2.

On the supply chain front, the Ford team expects to finish the quarter with between 40,000 and 45,000 nearly-finished vehicles—a disproportionate number of them higher-margin trucks and SUVs—awaiting one or more parts. By comparison, that number was 53,000 at the end of the first quarter but had been whittled down to 18,000 by June 30 as Ford secured more semiconductors and other components.

Ford’s warning echoes comments made by General Electric Co. CFO Carolina Dybeck Happe, who told attendees of a Morgan Stanley conference that enduring supply chain pressures will delay some deliveries to customers. That will, as with Ford, dent GE’s cash flows during the third quarter.

This story originally appeared on IndustryWeek, a sister brand to FleetOwner.

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal, and T&D World. 

With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati. He later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector and many of its publicly traded companies.

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

Boost truck leasing profits with telematics insights! Reduce maintenance costs, improve uptime, and strengthen customer relationships. Learn how data drives success.
This free guide outlines simple steps for hiring and onboarding commercial drivers while ensuring that you meet Regulation Part 391 and maintain fully compliant driver qualification...
Ready to boost fleet efficiency by up to 50%? Learn how AI-powered dispatch and next-gen tech are transforming TMS workflows, improving driver planning, and streamlining operations...
Gain a strategic edge in today’s evolving fleet landscape. Join us to explore how fuel cards are helping fleet managers cut costs, enhance control, and prepare for an electrified...