DETROIT – Ford Motor’s stock suffered its worst day in more than 11 years, after the automaker pre-released part of its third-quarter earnings report and warned investors of $1 billion in unexpected supplier costs.
Shares of Ford closed Tuesday at $13.09 apiece, down by 12.3%. The Detroit automaker lost roughly $7 billion off its market value.
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It was also the stock’s worst day on a percentage basis since Jan. 28, 2011, when the automaker’s fourth-quarter earnings disappointed investors and the stock shed 13.4% to close at $16.27 a share, according to data compiled by FactSet.
Ford, after the markets closed Monday, said supply problems have resulted in parts shortages affecting roughly 40,000 to 45,000 vehicles, primarily high-margin trucks and SUVs that haven’t been able to reach dealers.
Despite the problems and extra cost, Ford affirmed its guidance for the year but set expectations for third-quarter adjusted earnings before interest and taxes to be in the range of $1.4 billion to $1.7 billion. That would be significantly below the forecasts of some analysts, who were projecting quarterly profit closer to $3 billion.
Ford cited recent negotiations resulting in inflation-related supplier costs that will run about $1 billion higher than originally expected.
While no major Wall Street analysts downgraded the stock in light of the update, several were caught off guard by Ford’s announcement. Expectations were that supply chain problems were easing. What’s more, Ford had recently been avoiding such problems better than some of its competitors.
Goldman Sachs analyst Mark Delaney said his firm was “surprised by the 3Q pre-announcement given the progress that Ford had previously made on supply chain bottlenecks.”
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