Huge numbers: Farley speaks at a truck plant to launch the 2025 Ford Expedition in Louisville, Kentucky. The CEO says Ford is looking for ways to build more parts in the United States and that it has let the White House know what the cost of these would be. — AP
DETROIT: Ford Motor Co has suspended its full-year financial guidance and says President Donald Trump’s auto tariffs will take a toll on profit, joining rivals stung by volatile global trade policies.
The automaker expects the duties to reduce 2025 adjusted earnings before interest and taxes (Ebit) by about US$1.5bil on a net basis this year, it said while reporting a first quarter profit that beat expectations.
The company’s total tariff impact is about US$2.5bil, US$1bil of which the company expects to offset through actions such as using so-called bonded transportation to shield parts from levies as they cross international borders, chief financial officer Sherry House told reporters.
Ford cited seven factors in withdrawing its earlier forecast for as much as US$8.5bil in adjusted Ebit this year, including potential “industrywide supply chain disruption” tied to Trump’s duties and the risk that levies may increase in the future.
Ford’s shares fell 2.4% in after-hours trading on Monday. The stock had gained about 3.8% this year through last Friday’s close, better than the 3.3% decline by the S&P 500 Index.
The company plans to provide an updated outlook when it reports second quarter earnings.
Chief executive officer Jim Farley acknowledged how difficult it is to predict the tariffs’ ultimate impact on costs, especially when the Trump administration is renegotiating trade deals, including the agreement between the United States, Canada and Mexico.
“It’s a pretty dynamic situation. I think this is all really new for all of us,” Farley said on Monday during a call with analysts.
“We should just all expect to be a little bit patient during this time to see how these policies kind of work out.”
Ford is the latest automaker to point to the steep costs of Trump’s back-and-forth campaign to reshape global trade.
Trump has said 25% tariffs imposed on imported vehicles and parts are needed to bring more production and jobs to the United States.
Automakers have warned that broad, lasting tariffs will increase costs, jeopardise employment and potentially increase new-car prices that are already nearing US$50,000 on average.
Farley last week said the company won’t increase the price of its vehicles until it sees how rivals respond to added tariff costs.
The US$1.5bil hit Ford now expects comes despite relief granted to automakers last week.
Trump spared imports subject to the auto tariffs from paying additional levies targeting other goods, such as steel and aluminum.
The White House also will phase in tariffs on auto parts over two years to give companies time to move production to the United States.
Ford said on Monday it was looking for ways to build more parts in the United States. But Farley said Ford has let the White House know the cost these changes will have on its business.
“These are huge numbers,” Farley said of the US$2.5bil gross tariff hit Ford is taking.
“We’ve been very clear with the government about the flexibility we need.”
The White House actions announced last week were “really important steps forward,” House said on a call with reporters on Monday, noting that trade policy continues to be uncertain.
Ford is also waiting to see if it can receive credit for the US content in vehicles it imports from Mexico, she said.
Ford’s tariff exposure is less than its Detroit competitors because the Dearborn, Michigan-based automaker domestically produces 80% of the cars it sells in the United States.
General Motors Co last week slashed its profit outlook for the year and said its tariff exposure was as much as US$5bil.
GM on May 2 cut jobs and production at a Canadian plant producing Chevrolet Silverado pickups as it moved production of those models to a plant in Indiana.
Ford has struggled with higher warranty costs and other expenses, including losses on electrical vehicles it has said may reach US$5.5bil this year.
The cost of launching redesigned versions of its big Expedition and Lincoln Navigator sport utility vehicles (SUVs) in the first quarter also sapped profits.
Ford’s first quarter adjusted profit was 14 US cents a share, better than the four-cent average loss expected by analysts.
Ford Blue, the automaker’s unit that produces traditional internal combustion engine vehicles and gas-electric hybrids, saw Ebit plummet to US$96mil from US$901mil a year earlier, as the cost to launch the Expedition and Navigator SUVs weighed on results.
Still, that’s better than the US$288mil loss forecast by Wall Street.
Ford’s first quarter US vehicle sales fell 1.3%. Ford Pro, the automaker’s highly profitable commercial vehicle business, posted Ebit of US$1.3bil, roughly in line with analyst expectations.
Model E, Ford’s electric vehicle (EV) unit, experienced a first quarter loss Ebit of US$849mil, less than the US$1.4bil deficit analysts had predicted.
Ford’s EV sales rose 11.5% in the first quarter, but accounted for just 4.5% of the company’s overall deliveries. — Bloomberg
