Ford posts strong earnings but cuts outlook
Posted October 23, 2019 5:12 p.m. EDT
CNN — Ford, which is likely the next US automaker to face negotiations with the United Auto Workers union, reported strong earnings Wednesday.
But the company warned investors that it doesn't expect to do as well the last three months of the year as it earlier predicted.
Ford said the headwinds it is facing, including higher warranty costs, higher than planned incentives to attract North America car buyers, and lower sales in China, have all intensified since it gave its earlier guidance for full-year results.
Shares of Ford fell more than 2% in after-hours trading on the lowered guidance.
But for the just completed third quarter, the company reported adjusted earnings of $1.4 billion, up $182 million from a year earlier. That easily topped Wall Street forecasts.
The strong earnings came despite a modest 2% decline in sales revenue in the quarter. Ford's market share in most regions around the globe slipped slightly. But the company said reducing costs provided a better operating income despite the lower sales.
Ford is in the process of restructuring its business, which it said will cost about $11 billion over a four to five year period. It has been pulling out of less profitable markets and closing factories in Europe and Russia.
But unlike rival GM, which angered members of the UAW ahead of negotiations by closing US plants, Ford has not cut US factories or jobs. Nearly 50,000 General Motors employees are in the process of voting on a tentative labor deal that could end their five-week strike.
Ford is expected to be the focus of negotiations with the union once the strike at GM ends.