Picket line at the Ford plant in Wayne, Michigan, this Wednesday. REBECCA COOK (Portal)
Ford has decided to withdraw its full-year profit forecast, it announced Thursday when it reported third-quarter results. This is because the company needs to assess the impact on its balance sheets of the auto strike and the new collective bargaining agreement tentatively agreed upon with the United Auto Workers (UAW). It follows in the footsteps of General Motors, which has yet to reach an agreement and also decided this week to withdraw its forecasts.
“In light of the impact of the UAW strike and pending ratification of the tentative agreement with the union announced Wednesday evening, Ford is withdrawing its full-year 2023 operating results guidance,” the company said in a statement.
In the third quarter, the Dearborn, Michigan-based company increased its sales by 11% to 43,801 million dollars (around 41,500 million euros at current exchange rates) compared to the same period last year, thanks in particular to increases in car prices. The group made a profit of $1,199 million, compared to losses of $827 million last year, according to annual reports published by the company.
In the first nine months of the year, sales rose 14% to $130,229 million. Between January and September, the group earned $4.873 million, compared to $3.270 million in the red in the same period last year. In July, Ford raised its forecast for net operating income before interest and taxes to a range of $11 billion to $12 billion. In the first nine months there were 9.4 billion, 20% more than in the previous year.
“We are radically changing the way we work with a range of measures that put the right people with the right skills in the right places in the organization so that our promise is not obscured by cost and quality issues,” said he said in a statement from Ford boss Jim Farley, who did not elaborate on which quality and cost problems he was specifically referring to.
Ford agreed with unions to raises of 25% over four years, which when other parts of the agreement are taken into account are actually more than 30%. The company hopes to enable around 20,000 striking workers in three of its factories to return to work.
The figures for the third quarter exceed analysts’ forecasts in terms of sales, but fall short of expectations in terms of profits. Shares reacted with declines outside of normal trading hours.
A 7.7% increase in U.S. vehicle sales during the quarter as well as strong pricing bolstered Ford’s results for its traditional internal combustion engine models, such as the Bronco SUV and F-150 pickup truck. That unit, known as Ford Blue, posted third-quarter earnings before interest and taxes of $1.718 billion, below analysts’ average forecast of $1.94 billion. Revenue in this business rose 7% to 25.6 billion.
Ford’s difficulties in its emerging electric vehicle business, known as Model e, resulted in a loss before interest and taxes of $1.329 billion, larger than analysts expected, “attributable to continued investment in new generation electric vehicles” and the difficult dynamics of the market,” said the company. Revenue from the electric car business rose 26% in the quarter, but still only contributed $1.8 billion. Sales of Ford’s flagship electric vehicle, the F-150 Lightning pickup truck, plunged 46% in the quarter as the company closed its factory for expansion, delayed delivery of vehicles for quality checks and temporarily laid off factory workers.
Ford’s commercial business, known as Ford Pro, posted net operating income of $1.654 billion, below the $2.16 billion expected by analysts. Sales for this division amounted to $13.8 billion, an increase of 16%.
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