Ford’s stock has biggest daily decline since 2011

NEW YORK: Ford Motor Co’s stock tumbled over 12% on Tuesday (Sept 20) in its deepest one-day decline in over a decade after the automaker said inflation-related costs would be US$1 billion (RM4.55 billion) more than expected in the current quarter and that parts shortages had delayed deliveries.

The stock ended at US$13.09, making its percentage decline for the session its largest since January 2011.

Ford’s preliminary third-quarter results, released late on Monday, sent shares of rival General Motors Co down 5.6% as analysts said it might take more time for automakers to recover from chip shortages.

“It appears that across the industry, chip and components shortages may be improving at a slower pace than anticipated,” Deutsche Bank analyst Emmanuel Rosner said.

In July, Ford said it expected commodity costs to rise US$4 billion for the year.

The greater Detroit manufacturer’s warning comes less than a week after delivery company FedEx Corp withdrew its financial forecast due to slowing global demand.

Ford also estimated it would have 40,000 to 45,000 vehicles in inventory lacking parts.

Ford, which is set to report third-quarter results on Oct 26, affirmed 2022 adjusted earnings before interest and taxes forecast of US$11.5 billion to US$12.5 billion.

It was unclear if chip and parts supply will normalize by the end of the year, Deutsche Bank's Rosner said.

Ford's shares are down 37% in 2022, well over the S&P 500's 19% decrease. – Reuters