The United Auto Workers (UAW) targeted strike against Ford (as well as General Motors and Stellantis) began back in mid-September as the two sides couldn’t reach an agreement prior to the expiration of their previous contract, and ultimately lasted six weeks before the both came to a tentative agreement in late October that has since been ratified by UAW members. However, the strike figures to have more of a lasting impact on Ford’s bottom line after several weeks of production shutdowns at multiple plants, which the automaker previously said cost it around $1.3 billion in lost profit. Now, Ford has adjusted its 2023 guidance and upped that number even more.
Ford previously withdrew its 2023 financial guidance in October following the strike, and has been working to update that information ever since. CFO John Lawler is presenting the results of those efforts at the Barclays Global Automotive and Mobility Tech Conference this morning, and it’s a pretty significant change to say the least.
Ford now anticipates full-year 2023 adjusted earnings before interest and taxes of between $10 billion and $10.5 billion, which includes $1.7 billion in strike-related lost profits, $1.6 billion of which comes from the fourth quarter. This is a direct result of lost production related to high-margin trucks and SUVs, which resulted in vehicle wholesales that are roughly 100,000 units lower than planned. Ford generated $4.9 billion of net income and $9.4 billion in adjusted EBIT through the first three quarters of the year, prior to full effects of the work stoppage. Now, full-year 2023 adjusted free cash flow is expected to come in somewhere between $5.0 billion and $5.5 billion. Regardless, as Lawler notes, Ford remains confident in its current position and future outlook, financially speaking.
“This industry is going through the biggest technology-led transformation we’ve ever seen and some companies, new and old, are going to be left behind,” Lawler said before the conference. “Ford+ is the right strategy to win – we’ve got a highly talented team that allocates capital with great discipline, so that we’re executing with consistency, generating strong growth and profitability, and are less cyclical.”