Automaker Ford weakens profit outlook amid price war, shares fall

By Nora Eckert and Nathan Gomes

(Reuters) – Ford Motor said on Monday it expects to hit the low end of its full-year profit forecast, sending the company's shares down 5% in after-hours trading as a price war hurts the U.S. automaker's bottom line .

Ford expects to generate earnings before interest and taxes of about $10 billion this year, down from the previous range of $10 billion to $12 billion.

“There is no doubt that there is a global price war fueled by excess capacity, a flood of new electric vehicle nameplates and massive compliance pressures,” CEO Jim Farley said in a call with analysts.

Rival General Motors beat Wall Street expectations when it reported third-quarter results last week and said next year's profit looked similar to this year.

Ford has also been weighed down this year by high warranty costs and supply chain problems, made worse by recent hurricanes, Chief Financial Officer John Lawler said.

However, third-quarter profit fell less than expected.

The company reported third-quarter net income of $900 million, or 22 cents per share, down from 30 cents a year earlier. The results were hurt by a $1 billion charge related to the halting of production of a three-row electric SUV in August.

“Ford and other domestic automakers face headwinds from still-high interest rates and well-above-average inventory levels, leading to an increase in stimulus and other measures that are likely to squeeze margins,” said CFRA Research analyst Garrett Nelson.

On an adjusted basis, Ford reported quarterly profit of 49 cents per share, compared with analysts' average estimate of 47 cents, according to data compiled by LSEG.

Ford's commercial vehicle and gas engine divisions posted a combined EBIT of about $3.4 billion, increasing the company's profits despite steep losses on electric vehicles. The company's inventory was above its target range as it ended the quarter with gross inventory of 91 days and dealer inventory of 68 days, Farley said.

Farley has made tough decisions about the company's electric vehicle lineup as competition from Tesla and Chinese automakers has increased over the past year. Ford has canceled the much-anticipated three-row electric vehicle it calls a “personal high-speed train,” saying the vehicle could no longer be profitable within the required time frame.

Company executives said new vehicles must be profitable within 12 months of launch to make the battery-powered business sustainable.

Ford shares have fallen about 6% this year, less than the 40% decline of Jeep maker Stellantis, as it grapples with declining sales and profits in North America and announces a management change.

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