Shares of Ford Motor Company fell at the most rapid pace since 2011, after the company said that inflation is driving supplier costs more than expected this quarter by a billion dollars, joining a group of major companies that warn of challenges spreading in the economy.
Global automaker Ford expects adjusted earnings before interest and taxes in the range of $1.4 billion to $1.7 billion when it reports results next month.
The initial estimate is well below the $3.7 billion in adjusted profit Ford reported last quarter and the $3 billion it made a year ago, according to Bloomberg.
A statement issued late Monday said shortages in key parts will keep Ford's stock of semi-completed vehicles high.
“High supplier costs associated with inflation appear to have a greater chance of recurrence than a chip shortage, suggesting some impact through 2023,” Ryan Brinkman, an analyst at JPMorgan Chase & Co., said in a note.
Ford shares fell 12% on Tuesday, the worst drop in the Standard & Poor's 500 Index and Ford's biggest one-day loss since 2011.
Other automakers also fell, including General Motors, which ended a 5.6% drop.
From FedEx to General Motors, McDonald's, and now Ford, companies are pointing to weak demand, stubborn supply chain hurdles, and a growing potential for a recession.
Ford's warning comes as the Federal Reserve this week expects to raise interest rates again in the fight against inflation, which has fallen slightly in recent months.
Ford now expects the number of unsold vehicles it largely describes as high-margin trucks and SUVs to reach about 40,000 to 45,000 by the end of the third quarter, which ends on September 30. She was confident that they could complete and sell those vehicles by the end of the year.
Ford said it still expects to earn between $11.5 billion and $12.5 billion for the full year, unchanged from its previous forecast.
