Ford Motor on Wednesday slashed its forecast for operating profit for the year after a disappointing third quarter that CEO Jim Hackett blamed on higher warranty expenses, bigger discounts and weaker performance in China.
Investors sold off Ford shares, which dropped 2.5% to $8.98 in after-hours trading while shares in automaker Tesla Inc surged over 20% on better than expected results.
In a conference call with experts, Hackett stated Ford “experienced more headwinds” than what they expected in the quarter.
“As a result, we will not grow adjusted EBIT this year as we intended,” Hackett stated, referring to earnings prior interest and taxes.
“We were disappointed in the overall performance,” he informed experts, referring to the uneven vehicle release and production ramp-up at an aging Chicago assembly plant.
“We took on too much,” stated Hinrichs, mentioning the difficulty of launching the Explorer and Aviator simultaneously when it was breaking in a new assembly line at the 95-year-old Chicago plant. “We have plenty of inventory now at dealers,” he included.
The third quarter included $1.5 billion in expenses for the company’s global restructuring, $800 million of which was related to the formation of a joint venture in India with automaker Mahindra.
Ford’s ongoing restructuring consists of cutting costs and overhauling its product lineup in major worldwide markets like China and Europe.
Ford continues to deal with the prospect of negotiating a new four-year labor agreement with the United Auto Workers after the union’s more than month-long strike against General Motors, that cost GM about $2 billion.
Ford reported a third-quarter net profit of $425 million, or 11 cents a share, compared with $991 million, or 25 cents a share, a year previously.
Excluding one-time charges, Ford earned 34 cents per share, higher than the 26 cents analysts had expected according to IBES data from Refinitiv.
Revenue in the quarter dropped 2% to $37 billion, above the $33.98 billion expected.
Ford stated it now expects a full-year adjusted operating profit in the range of $6.5 billion to $7 billion, compared with $7 billion in 2018. In July, it had forecast a boost in the range of $7 billion to $7.5 billion.