The shares of Ford Motor Co. fell more than 12% on Tuesday, September 20, 2022, marking the biggest one-day drop since 2011 after it issued a profit warning for its third quarter of 2022. The company's stock price ended at $13.09 on September 20, 2022, a decline of 37% so far in 2022, far more than the 19% drop in the S&P 500.
According to the company, the lack of availability of automotive parts and high inflation would hurt profitability in the third quarter of 2022. It forecasts third-quarter adjusted earnings before interest and taxes to come in between $1.4 billion and $1.7 billion compared to $3.7 billion in the second quarter of 2022. It also reiterated its full-year 2022 profit forecast of $11.5 billion to $12.5 billion. In September 2022, the automobile manufacturer laid off 3,000 employees in a cost-cutting measure.
Ford is the latest well-known brand to mention how the economy affects business operations. The automaker also disclosed that its third-quarter supplier costs attributable to inflation were nearly $1 billion more than anticipated. Companies including FedEx Corp., General Electric Co., and McDonald's Corp. have also cited how their operations are being impacted by waning demand, persistent supply-chain bottlenecks, and the increasing likelihood of a recession.
The US Federal Reserve is anticipated to raise rates by 75 basis points to combat the high inflation rate. The US stock market has recently suffered due to the Fed's aggressive monetary policies. Investors are concerned that the Fed's actions may stifle the economy.
Ford was compelled to lower its third-quarter profitability prediction due to a components shortfall that has left thousands of its most profitable vehicles lying on lots while awaiting final assembly. The company anticipates having 40,000 to 45,000 incomplete automobiles on its hands when the quarter concludes on September 30, 2022. Most of them are popular truck and SUV models, among Ford's top revenue generators.
The capacity of automakers to fully assemble vehicles and satisfy increasing consumer demand has been hindered by a global scarcity of computer chips. In July 2022, General Motors- said that it had to assemble 95,000 vehicles without one or more components due to a shortage of processors and other supplies. Additionally, it stated that its incomplete automobiles should be finished and available for purchase by the end of the year.
Germany
Netherlands
United States of America
United States of America
Germany
Germany
Japan
South Korea
China
United States of America
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Access more premium companies when you subscribe to Explorer
Contact the team or request a demo to find out how our data can drive your business forward