Ford, GM earnings fall as gross sales fall because of chip scarcity – CBS Detroit

DETROIT (AP) – The worldwide laptop chip scarcity squeezed third-quarter earnings for Ford and crosstown rival Basic Motors as the 2 firms had been set to briefly shut down factories, pinching provides on supplier tons.

Ford’s internet revenue of $ 1.83 billion fell 23% from a 12 months in the past, whereas GM’s revenue fell 40% to $ 2.4 billion. Excessive costs, primarily for pickup vans and huge SUVs that automakers bought, dampened the chew from falling gross sales.

Ford, which launched its outcomes after Wednesday’s closing bell, stated it might resume paying a dividend, 10 cents per share, from the fourth quarter. It will value the corporate round $ 400 million per quarter. Ford shares jumped 7.5% in aftermarket buying and selling.

READ: Automakers envision electrical future: GM and Ford shall be totally electrical by 2040

DETROIT, MI – SEPTEMBER 17: The Basic Motors brand on the World Headquarters constructing is displayed on September 17, 2015 in Detroit, Michigan. Mary Barra, CEO of Basic Motors, and Mark Reuss, President of GM North America, right this moment held an worker city corridor and question-and-answer session with the media to debate the $ 900 million settlement. GM {dollars} with the Justice Division concerning the GM ignition. change reminders. (Picture by Invoice Pugliano / Getty Photos)

The corporate stated its revenues fell 5% from a 12 months in the past to $ 35.68 billion. That is beneath Wall Avenue’s estimate of $ 38.2 billion.

Excluding one-off objects, the Dearborn firm made 51 cents per share, beating the 27 cents anticipated by analysts polled by FactSet.

Ford’s gross sales fell 27% from July to September in america, its most profitable market. The corporate additionally misplaced 2.4 proportion factors of market share in america, largely as a result of, like GM, it could not produce sufficient automobiles to fulfill demand.

However the common new Ford car bought for greater than $ 51,000 within the quarter, up practically 13% from a 12 months in the past, based on Edmunds.com.

CFO John Lawler stated Ford has the money and earnings to put money into automobiles and electrical companies. He stated the corporate is assured within the trajectory of its enterprise.

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“This offers us the monetary flexibility to totally fund our plan and all of our different capital wants,” he stated. “We’re additionally centered on whole returns to shareholders, not solely on inventory value appreciation but in addition on dividends.”

Lawler stated there’s a robust demand for Ford’s merchandise which the corporate can not meet as a result of chip scarcity. Globally, he stated he believes the corporate may promote 200,000 Mustang Mach-E electrical SUVs per 12 months.

He stated the chip scarcity is predicted to ease a bit from October to December, and supplier gross sales are anticipated to rise 10% this quarter from the earlier one. As provides enhance, the scarcity will proceed into subsequent 12 months and probably into 2023, he stated.

Ford raised its outlook for full-year pre-tax earnings to $ 10.5 billion to $ 11.5 billion, and stated it plans to make capital investments of $ 40 billion to $ 45 billion from 2020 to 2025. This consists of round $ 15 billion that can go to battery electrical automobiles throughout the interval.

Lawler warned, nonetheless, that the corporate was going through increased prices in supplies and freight. The prices of commodities resembling metal are anticipated to extend by $ 3 billion to $ 3.5 billion this 12 months, with an extra $ 1.5 billion subsequent 12 months, he stated.

FILE – On this Sunday, October 11, 2020, file picture, a row of 2020 sport utility car pickups are at a Ford dealership in Denver. Ford Motor Co. says it made $ 3.26 billion within the first quarter, helped by rising car costs and regardless of manufacturing cuts because of a worldwide scarcity of laptop chips. Earnings offset a internet lack of practically $ 2 billion from a 12 months in the past, when Ford ran out of money at the beginning of the coronavirus pandemic. (AP Picture / David Zalubowski, file)

GM’s earnings fell $ 4 billion final 12 months as gross sales slumped and the corporate misplaced market share in america, additionally its most worthwhile nation. Income for the quarter plunged 25% to $ 26.78 billion.

GM CEO Mary Barra stated on a convention name with analysts that she was “pretty assured” that GM’s San Francisco-based autonomous car subsidiary Cruise would carry passengers with out human security driver subsequent 12 months. To do that, Cruise nonetheless wants a ultimate allow from California regulators.

Barra additionally instructed reporters on Wednesday that the worldwide semiconductor scarcity, in addition to outbreaks of COVID at provider factories, hit the corporate within the third quarter. “It continues to be considerably risky,” she stated.

Nevertheless, GM sees enchancment within the present quarter and expects extra provides within the first three months of 2022.

GM stated it expects to provide about 200,000 fewer automobiles within the second half of this 12 months in comparison with the primary half, with a lot of the impression occurring from July via September.

Barra stated she has spoken to CEOs of a lot of the main chipmakers and that firms are engaged on methods to make sure shortages do not occur once more. “I believe we will certainly see adjustments to verify we have now the appropriate provide,” she stated.

GM’s revenue got here although third-quarter gross sales in america had been practically 33% decrease than a 12 months in the past. The corporate misplaced 3.8 proportion factors of market share in america, Edmunds stated.

However Barra stated she expects GM’s market share to rebound when factories return to regular manufacturing. “We promote the whole lot we will. I want we had extra automobiles, ”she stated.

The willingness of customers to pay excessive costs for uncommon new automobiles made cash circulate for GM. The typical promoting value paid for a GM car exceeded $ 50,000 for the quarter, up greater than 16% from a 12 months in the past, Edmunds stated. Barra stated as soon as the provision will increase, she expects excessive costs to return down.

With the anticipated enchancment in chip provides, GM has raised its full-year internet revenue forecast to a variety of $ 8.1 billion to $ 9.6 billion. Within the second quarter, it had forecast $ 7.7 billion to $ 9.2 billion for the 12 months.

GM shares closed Wednesday down 5.4% at $ 54.26.

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