Ford Motor Company said it expects to hit operating profit this year by $1.5 billion due to tariffs and is suspending its full-year financial outlook, citing uncertainty caused by the Trump administration's shift in trade policy.
Ford reported Monday that its first-quarter net income fell by about two-thirds to $473 million, or 12 cents a share, from $1.33 billion, or 33 cents a share, in the same quarter a year earlier.
Revenue fell 5% to $40.66 billion.
The results beat expectations among analysts surveyed by FactSet, who had expected earnings per share to remain flat in the prior year.
Revenue is projected to be $38.02 billion.
However, shares fell more than 2% in after-hours trading.
Last week, General Motors said it was preparing for the potential impact of auto tariffs that could reach $5 billion by 2025.
Ford and Tesla are expected to face less tariff pressure than GM and other automakers because they make most of their vehicles in the U.S.
However, the impact they will experience will be significant.
Ford initially forecast earnings before interest and taxes in the range of $7 billion to $8.5 billion by 2025, but the company said Monday that tariff risks “make updating full-year guidance difficult in the current environment given the potential range of outcomes.”
Ford CEO Jim Farley has emphasized the benefits of increased domestic production, and he reiterated that on Monday while acknowledging that the industry's turmoil from tariffs is still in its early stages.
“It's too early to draw conclusions about market dynamics, including potential industry-wide supply chain disruptions,” Mr. Farley said on a conference call with analysts to discuss financial results.
“The automakers with the most significant presence in the U.S. will have a significant advantage, and that certainly includes Ford.
“This puts us in a winning position.”
US President Donald Trump has said one of the goals of his trade policy is to bring more manufacturing, such as auto manufacturing, back to the US.
Mr Trump signed orders last week to ease some of his 25% tariffs on cars and auto parts, a move he said would give automakers more time to adjust their manufacturing processes.
Automakers and independent analysts say the tariffs could raise prices, reduce sales and make American products less competitive internationally.
The potential impact of tariffs was a key topic of discussion in Ford's earnings calls, with one executive indicating that even a small issue with a few components could have a major impact.
“For example, importing rare earth materials from China has become quite challenging for us and for the industry over the last few weeks,” said Chief Operating Officer Kumar Galhotra.
“Just a few parts could potentially cause a disruption in our manufacturing process.”
Sourse: breakingnews.ie
