Big 3 automaker’s exposure to aluminum plant fire, tariffs key for investors

finance.yahoo.com

Big Three automaker Ford (F) is on deck to report third quarter results after the bell today, with particular focus on an aluminum plant fire that may impact Ford’s franchise F-150 sales. The company is also expected to give investors more details on the impact of President Trump’s auto tariffs.

For the quarter, Ford is expected to report revenue of $43.70 billion, per Bloomberg consensus, with adjusted EPS of $0.36 on adjusted EBIT (earnings before interest and taxes) of $2.02 billion.

The fire at a Novelis aluminum plant in New York has impacted production of Ford’s large SUVs and F-150 Lightning EV. Expectations are that lost production will cost Ford close to $1 billion in lost profit.

Ford is also grappling with the effect of President Trump’s auto tariffs, which cost the automaker $800 million in Q2 and is expected to come in at $2 billion for the year, reflecting a $3 billion gross adverse adjusted EBIT impact, partially offset by $1 billion of mitigation efforts.

Ford also issued new guidance in Q2 with full-year adjusted EBIT seen at $6.5 billion to $7.5 billion, which the company said takes into account the $2 billion tariff impact. Ford also said it sees full-year adjusted free cash flow in a range of $3.5 billion to $4.5 billion, with capital expenditures of approximately $9 billion.

GM reported this week that its Q3 tariff costs came in at $1.1 billion, with a full-year tally of $3.5 billion to $4.5 billion.

While the impact of the Novelis fire, as well as rising warranty costs for recalls, will likely weigh on results, changes to auto tariff offsets will help the automaker.

A new Ford F-150 truck was launched at a celebratory event at the Ford Dearborn Plant on April 11, 2024, in Dearborn, Mich. (Bill Pugliano/Getty Images) · Bill Pugliano via Getty Images

The government has extended the timeline that automakers can offset their tariff costs by the percentage of the value of vehicles assembled in the US. Ford, which builds 80% of its vehicles in the US, will benefit from this, as well as from the tariffs on medium- and heavy-duty trucks.

As part of its Ford+ plan, Ford divided its business into three units: Ford Blue for the traditional gas-powered business, Ford Model e for the electric vehicle division, and Ford Pro for its commercial and super-duty truck business. Per Bloomberg, Ford is expected to report the following:

Ford Blue: $25.67 billion in revenue
Model e: $1.78 billion in revenue
Ford Pro: $16.43 billion in revenue

Despite some tariff hiccups, Ford sales surged in Q3, led by its trucks and electrified vehicles.

Ford reported total sales of 545,522, up 8.2% compared to a year ago. Ford sales of pickups, such as the F-Series, Ranger, and Maverick, combined with its vans, jumped 7.4% to 313,654 units sold, with F-Series trucks up nearly 13% year to date.

Source link