NEW YORK – Ford Motor reinstated 2023 guidance on Thursday after withdrawing its forecast last month due to the effects of labor strikes and negotiations with the United Auto Workers union.
Guidance calls for adjusted earnings before interest and taxes or EBIT of $10 billion to $10.5 billion and adjusted free cash flow of between $5 billion and $5.5 billion. This compares to its previously announced guidance of adjusted-EBIT between $11 billion to $12 billion and adjusted free cash flow of $6.5 billion to $7 billion.
Ford said the new UAW labor agreement is expected to cost $8.8 billion over the life of the contract, which expires in April 2028. Crosstown rival General Motors on Wednesday took a $9.3 billion hit over the term of the agreement.
Before the UAW strikes, which ended after about six weeks, Ford was “prepared” to impact its guidance, Chief Financial Officer John Lawler said during the company’s third-quarter earnings report on Oct. 26.
At the time, Lawler said the company had already lost $1.3 billion in earnings due to the production loss of about 80,000 vehicles due to the UAW strike, including about $100 million during the third quarter. On Thursday the company updated that impact amount to $1.7 billion, including $1.6 billion in the fourth quarter.
Ford further confirmed Thursday that the UAW deal is expected to add about $900 to costs per assembled vehicle by 2028. Lawler previously said Ford would work to “find productivity and efficiency and cost reductions across the company” to offset additional costs and move forward. Previously announced profitability targets.
The company said it plans to cancel or postpone $12 billion of investments related to electric vehicles.
“We’ve inherited an extremely talented team that allocates capital with great discipline so we can execute with consistency, strong growth and profitability,” Lawler said in a statement Thursday, referring to the company’s Ford+ turnaround plan. and be less cyclical.” ,
Lawler is expected to discuss the company’s restated guidance at a Barclays investor conference Thursday morning.
Ford’s update comes a day after GM said it planned to boost its quarterly dividend next year by 33% to 12 cents a share; Launch an accelerated $10 billion share repurchase program; And restate its 2023 guidance to include an estimated $1.1 billion in earnings before interest and tax, or EBIT-adjusted, impact from UAV strikes.
GM’s forecast called for net income attributable to stockholders of $9.1 billion to $9.7 billion; Adjusted EBIT of $11.7 billion to $12.7 billion; and adjusted earnings per share of approximately $7.20 to $7.70.
Both UAW agreements include hourly wage increases of at least 25%, the restoration of cost-of-living adjustments and increased profit-sharing payments, among other benefits.
Chrysler parent company Stellantis, which was the second of the so-called “Big Three” U.S. automakers to reach an agreement with the UAW, has not disclosed the expected cost of its labor agreement with the union.
Source: www.cnbc.com
