The recent work stoppage by the United Auto Workers (UAW) union impacted the company’s ability to meet its financial targets.
On Thursday, October 26, Ford Motor Co (NYSE: F) reported its Q3 2023 earnings while missing Wall Street expectations. The company has been restructuring its operations and regrouping after the conclusion of nearly six weeks of US labor strike that cost the company a staggering $1.3 billion.
Ford in Q3 2023
In the third quarter, Ford reported a shift to net income, posting $1.2 billion, equivalent to 30 cents per share, compared to a loss of $827 million, or 21 cents per share, in the previous year. After accounting for specific items, the per-share earnings reached 39 cents.
The company experienced an 11% rise in overall revenue for the quarter, reaching $43.8 billion, up from $39.39 billion in the same period the prior year. Furthermore, adjusted earnings before interest and taxes (EBIT) showed a 22% increase, reaching $2.2 billion, compared to the previous year’s figure.
Soon after the results, the Ford stock tanked by more than 4% in the after-market hours. Ford has retracted its previously announced earnings forecast due to the recent work stoppage by the United Auto Workers (UAW) union, which ended with a tentative agreement.
The strike, which commenced on September 15, impacted the company’s ability to meet its financial targets. Before the strike, Ford was on track to achieve its earnings guidance, according to Chief Financial Officer John Lawler.
However, third-quarter results fell short of expectations, with adjusted earnings per share at 39 cents compared to the anticipated 45 cents, and automotive revenue at $41.18 billion against the expected $41.22 billion. Lawler attributed the underperformance to the UAW strike and ongoing cost and quality challenges that have affected the company’s operations in recent years. During the results call, Lawler told reporters:
“It is the cost and quality that we need to continue working on to improve the business. There’s a lot of positives within the business, and, unfortunately, it’s really not all shining through because of our cost and quality.”
Ford’s to Delay Its EV Plans
During the quarter, Ford’s traditional business operations under Ford Blue generated earnings of $1.72 billion, while its Ford Pro commercial business brought in $1.65 billion in revenue. On the other hand, the Model E electric vehicle unit reported a loss of $1.33 billion in the period from July to September.
Ford has decided to postpone approximately $12 billion in previously announced electric vehicle (EV) investments, including the construction of an EV battery plant in Kentucky. However, the company remains committed to progressing with its new EV plant and campus in West Tennessee, known as Blue Oval City.
The decision to delay these investments is due to lower-than-expected demand for EVs, coupled with rising raw material and labor costs, as well as pricing competition from leading EV manufacturer Tesla Inc (NASDAQ: TSLA).
“The transition to EVs is well underway. Adoption is growing, even if pace is slower than what the industry, including us, expected. Along the way, we’re going to balance production of gas, hybrid and electric vehicles in ways that many companies can’t, based on what consumers want,” said Lawler.
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