US automaker Ford Motor lowered its forecast for 2025 due to a September fire at a supplier's plant that disrupted production of the company's most marginal models - large pickup trucks and SUVs. Afterward, shares of the U.S. auto giant first sagged in extended trading, but then fully recovered the decline and ended the postmarket up 2.6%. If one-time factors are excluded, Ford actually, on the contrary, increased its forecast, analysts explained.

Details

Ford in its third-quarter report estimated the damage from the fire at aluminum supplier Novelis' plant in New York State to EBIT (earnings before interest and taxes) at $1.5-2 billion. However, the concern said it expects to offset most of the losses as early as 2025-2026, primarily by increasing production of affected models when supplies stabilize.

Ford's updated forecast for 2025 includes: adjusted EBIT of $6-6.5 billion, up from $6.5-7.5 billion in the July estimate; adjusted free cash flow of $2-3 billion, up from $3.5-4.5 billion previously; and capital expenditures of about $9 billion, unchanged. Ford CFO Sherry House noted that before the supplier fire, the automaker had planned to raise its 2025 adjusted EBIT guidance to more than $8 billion rather than lower it.

Ford shares initially fell in early New York trading after the Oct. 23 earnings release, but then reversed to be up 4%. The post-market ended with a 2.6% rise.

Ford also reported for the third quarter: it received record revenue of $50.5 billion and adjusted earnings per share of $0.45. By both indicators, the company confidently exceeded Wall Street's expectations, follows from Bloomberg data. EBIT of $2.6 billion was flat compared to the same period last year. Auto sales rose 8% year-over-year to 546,000.

What the analysts are saying

RBC Markets analyst Tom Narayan called the forecast revision "actually" an increase if you exclude the effect of the supplier fire and changes in duties, CNBC reported.

According to FactSet, during the last month the majority of analysts recommend to hold (consensus rating of Hold) Ford shares. The average target price of $11.4 per share calculated by the service indicates the risk of the company's quotations decrease by almost 8%.

Context

A fire at the Novelis plant damaged the hot-rolling mill and it will reopen earlier than expected in late November or early December, Ford Chief Operating Officer Kumar Galhotra told investors. Ford CEO Jim Farley said the automaker is looking with Novelis and other partners for sources of aluminum that can be processed in a cold-rolling mill not damaged by the fire, and is working in parallel to restore production throughout the plant. "We have made significant progress in a short period of time to minimize the impact in 2025 and restore production in 2026," Farley said.

This article was AI-translated and verified by a human editor

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