Ford, GM profits fall as sales drop due to chip shortage

The planetary machine spot shortage chopped into third-quarter profits astatine some Ford and crosstown rival General Motors, with some companies having to temporarily adjacent factories, pinching supplies connected trader lots.

Ford's nett income of $1.83 cardinal fell 23% from a twelvemonth ago, portion GM's nett dropped 40% to $2.4 billion. High prices, chiefly for the pickup trucks and large SUVs that the automakers sold, eased the sting from little sales.

Ford, which reported results aft Wednesday's closing bell, said it would resume paying a dividend, 10 cents per share, starting successful the fourth quarter. It volition outgo the company astir $400 cardinal per quarter. Ford's banal jumped 7.5% successful after-market trading.

The institution said its gross dropped 5% from a twelvemonth agone to $35.68 billion. That fell abbreviated of Wall Street estimates of $38.2 billion.

Excluding one-time items, the Dearborn, Michigan, institution made 51 cents per share, beating the 27 cents expected by analysts polled by FactSet.

Ford's income fell 27% from July done September successful the U.S., its astir lucrative market. The institution besides mislaid 2.4 percent points of U.S. marketplace share, mostly due to the fact that similar GM, it couldn't nutrient capable vehicles to conscionable demand.

But the mean Ford caller conveyance sold for much than $51,000 during the quarter, up astir 13% from a twelvemonth ago, according to Edmunds.com.

Chief Financial Officer John Lawler said Ford has the currency and income to put successful electric vehicles and services. He said the institution is assured successful the trajectory of its business.

"That's providing america the fiscal flexibility to afloat money our program and each of our different superior needs," helium said. "We besides are focused connected full shareholder returns, not lone appreciating stock price but besides the dividends."

Lawler said determination is beardown request for Ford's products that the institution can't conscionable due to the fact that of the spot shortage. Globally, helium said helium thinks the institution could merchantability 200,000 Mustang Mach-E electrical SUVs per year.

He said the spot shortage should easiness a spot from October done December, and income to dealers should emergence 10% this 4th implicit the erstwhile one. While supplies volition improve, the shortage volition proceed into adjacent twelvemonth and perchance into 2023, helium said.

Ford raised its full-year pretax net outlook to betwixt $10.5 cardinal and $11.5 billion, and said it plans to marque superior investments of $40 cardinal to $45 cardinal from 2020 to 2025. That includes astir $15 cardinal that volition spell toward battery-electric vehicles during the period.

Lawler cautioned, however, that the institution faces higher costs successful materials and freight. Commodity costs specified arsenic alloy are expected to emergence $3 cardinal to $3.5 cardinal this year, and different $1.5 cardinal adjacent year, helium said.

GM's net fell from $4 cardinal past twelvemonth arsenic income slumped and the institution mislaid marketplace stock successful the U.S., besides its astir profitable country. Revenue for the 4th plunged 25% to $26.78 billion.

GM CEO Mary Barra, meanwhile, said connected a league telephone with analysts that she is "pretty confident" that GM's San Francisco-based Cruise autonomous conveyance subsidiary would beryllium carrying passengers without quality information drivers sometime adjacent year. To bash that, Cruise inactive needs a last licence from California regulators.

Barra besides told reporters Wednesday that the planetary shortage of semiconductors, positive COVID outbreaks astatine supplier factories, deed the institution during the 3rd quarter. "It inactive continues to beryllium somewhat volatile," she said.

However, GM is seeing betterment successful the existent 4th and expects further supplies successful the archetypal 3 months of 2022.

GM has said it expects to nutrient astir 200,000 less vehicles successful the 2nd fractional of this twelvemonth compared with the archetypal half, with astir of the interaction occurring from July done September.

Barra said she's spoken with the CEOs of astir large spot makers, and the companies are moving connected strategies to marque definite the shortages don't hap again. "I deliberation we'll decidedly spot changes to guarantee we person the close supply," she said.

GM's nett came adjacent though U.S. third-quarter income were astir 33% little than a twelvemonth ago. The institution mislaid 3.8 percent points of U.S. marketplace share, Edmunds said.

But Barra said she expects GM's marketplace stock to bounce backmost erstwhile factories get backmost to mean production. "We are selling everything we can. I privation we had much vehicles," she said.

Consumer willingness to wage precocious prices for scarce caller vehicles kept the wealth flowing for GM. The mean merchantability terms paid for a GM vehicle topped $50,000 for the quarter, up much than 16% from a twelvemonth ago, Edmunds said. Barra said that erstwhile supplies grow, she expects the high prices to ease.

With the expected betterment successful spot supplies, GM accrued its full-year nett income guidance to a scope of $8.1 cardinal to $9.6 billion. In the 2nd 4th it had forecast $7.7 cardinal to $9.2 cardinal for the year.

Shares of GM closed Wednesday down 5.4% astatine $54.26.

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