By Nora Eckert and Nathan Gomes
DETROIT, Oct 28 (Reuters) – Ford Motor’s third-quarter core profit increased slightly to $2.7 billion, as the Michigan automaker overcame production struggles with its best-selling F-150 trucks and higher commodity costs.
The automaker said on Wednesday it is facing higher costs from several factors, including the conflict in the Middle East, rising prices of copper and steel, steeper fuel costs and higher chip prices. Ford raised its full-year estimate for commodity costs to nearly $2.5 billion from about $2 billion.
The Iran war has added to cost pressures across industries, with rising diesel prices driving up freight costs and more expensive raw materials threatening to squeeze margins.
Ford raised the lower end of its annual guidance by $500 million to $10.5 billion, with the higher end of the range remaining at $11 billion in earnings before interest and taxes.
Ford shares were down about 1.5% after the bell.
Shares of General Motors fell sharply last week after it signaled that higher commodity costs would add pressure to its finances, despite posting strong profits in the third quarter.
Production of Ford’s F-150 trucks was disrupted last month for nearly a week due to an undisclosed supplier issue. The automaker had already been racing to recoup a significant production hit to those trucks, following a fire last year at Novelis, a key aluminum supplier in New York.
Ford CFO Sherry House told reporters on Wednesday that “Novelis’ operational recovery is largely behind us.”
The automaker is turning F-150 trucks at a much higher rate than normal, Ford CEO Jim Farley told analysts. It is aiming to keep about a 55- to 60-day supply of vehicles, versus the typical 80 to 100.
“It’s really allowed us to build that disciplined full-size truck business, while we watch our competitors play a very different game,” Farley said.
Adjusted earnings of 49 cents per share beat LSEG analyst forecasts of 40 cents per share. The automaker posted revenue of $49.5 billion and net income of $2 billion. House said Ford is anticipating 2027 core profitability to be roughly in line with 2026.
TRADE AGREEMENT URGENCY GROWS
RBC Capital Markets analyst Tom Narayan said automakers have strong pricing power from sturdy demand, and Ford said it expects pricing to finish 1% higher this year.
Narayan also said Ford and GM would especially benefit from a US-Mexico bilateral trade agreement before year-end, due to their reliance on an interconnected North American manufacturing system.
Ford produces key components in neighboring countries and assembles vehicles there, including the Bronco Sport and Maverick in Mexico and Super Duty trucks in Canada.
Speaking at a Reuters event on Tuesday, a Honda executive warned that a pending increase in US tariffs on steel and auto imports from Canada starting January 1 would be “catastrophic” for the industry. Those levies currently stand at 25%, and are set to double at the beginning of next year.
Reuters reported this week that the two governments are working on a deal to ease US tariffs on Canadian steel and autos, after trade talks broke down in August.
Farley has urged a swift resolution on the broader United States-Mexico-Canada Agreement so that US automakers can compete with Japan and South Korea, whose vehicles face 15% US tariffs under those countries’ trade deals with Washington.
Ford’s US vehicle sales were down 8.6% for the year through the third quarter, as the company felt the sting of phasing out its Escape SUV, along with falling EV and hybrid sales.
(Reporting by Nora Eckert in Detroit and Nathan Gomes in Bengaluru; Editing by Mike Colias and Sanjeev Miglani)
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