Ford, 1 billion higher costs for inflation. The title sinks

The Fed Ex profit warning was the first. Today it was the second American car manufacturer’s turn. Shares in Ford fell 10% after the Dearborn company reported that a combination of inflation and component shortages will leave the company with more unfinished vehicles than previously anticipated. The estimate is that third-quarter inflation-related supplier costs will be approximately $ 1 billion higher than expected. “Inflationary costs are worrying as they could persist into the fourth quarter and into 2023,” said Wells Fargo analyst Colin Langan. The company had estimated higher costs of $ 3 billion for the year in July due to inflationary pressures.

Ford’s preliminary third-quarter results also dropped shares in rival General Motors by 5% as some analysts said it may take longer for the auto industry to recover from the chip shortage. “It appears that the shortage of chips and components across the industry may improve at a slower pace than expected,” said Deutsche Bank analyst Emmanuel Rosner. Therefore, an emergency that began at the end of 2020 due to the pandemic (when demand from the automotive sector had exploded after months of stoppage and had put manufacturers in difficulty) is not resolved and which has cost homes a decline in volumes by millions. of units and to consumers longer waits for deliveries and a sharp rise in prices.

Returning to the stock market performance, an electric vehicle manufacturer like the champion Tesla, still the company with the largest capitalization in the sector (back in recent months close to the trillion dollars), has contained the losses below 1%, apparently far from destiny. of the houses born and raised with the internal combustion engine.

The concerns for Ford, and not only, also derive from the tensions in the financial markets due to the pace of interest rate hikes, decided by the Federal Reserve to try to tame inflation. A further increase of 75 basis points is expected tomorrow. The fear is that the economy will plunge into a recession.

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Ford, which is expected to report third quarter results on October 26, however, confirmed Monday its adjusted earnings before interest and taxes of between $ 11.5 and $ 12.5 billion. Ford shares traded around $ 13.5, the worst performance since February, before regaining a few decimal places.

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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