Ford Slides After New Profit Forecast, UAW Strike-Cost Tally

Nov 30, 2023

Ford pegged the cost of the six-week UAW strikes at $1.7 billion, more than rival GM's $1.1 billion estimate, while issuing an updated 2023 profit forecast.

Ford Motor (NYSE: F) - shares moved lower Thursday after the carmaker followed General Motors (GM) - Get Free Report in reinstating its full-year profit forecasts while noting it will lose around $1.7 billion from the United Auto Workers strike that ended late last month.

Ford said it sees adjusted full-year profit in the region of $10 billion to $10.5 billion, down from its July estimate of between $11 billion and $12 billion. Free cash flow should improve to between $5 billion and $5.5 billion.

The group reached a deal with the UAW on October 26 that will see members receive a 25% pay increase, including an initial boost of around 11% and a further 30% increase in cost-of-living adjustment payments. Ford said the contract would add $8.8 billion in costs over the 4 1/2-year contract.

GM said the six-week UAW strike would would clip around $1.1 billion from the group's bottom line. But as at Ford, GM said it would ultimately improve free cash flows thanks in part to strike-related shutdowns at various facilities around the country.

GM said it saw full-year adjusted profit in the region of $11.7 billion to $12.7 billion, down from its prior forecast of $12 billion to $14 billion. Diluted earnings, GM said, would likely come in between $7.20 and $7.70 a share, compared with its prior range of between $7.15 and $8.15 per share.

The carmaker also said it would boost its quarterly dividend by 33%, to 12 cents a share, starting in 2024 while immediately retiring $6.8 billion in GM stock through its new $10 billion buyback.