Ford reveals third-quarter net loss, weighed down by supply chain problems and Argo AI investment

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DETROIT – Ford Motor recorded a net loss of $827 million during the third quarter, weighed down by supply chain problems and an investment in autonomous vehicle unit Argo AI.

Still, the automaker narrowly beat Wall Street’s subdued expectations for the period and guided to the lowest end of its previously forecasted earnings for the year.

Shares of the company were down roughly 1% in extended trading following the report.

 Here’s how Ford performed, compared with analysts estimates as compiled by Refinitiv:

  • Adjusted earnings per share: 30 cents vs. 27 cents estimated
  • Automotive revenue: $37.2 billion vs. $36.25 billion estimated

Ford last month set investor expectations for the third quarter by partially pre-releasing its results, including projected adjusted earnings before interest and taxes in the range of $1.4 billion to $1.7 billion. Some analysts had been expecting a quarterly profit closer to $3 billion.

The company on Wednesday reported adjusted earnings of $1.8 billion for the quarter, down 40% from a year earlier but slightly above its own previously announced expectations.

Ford attributed the lower-than-expected results to parts shortages affecting 40,000 to 50,000 vehicles as well as an extra $1 billion in unexpected supplier costs during the quarter. At that time, the company reaffirmed its full-year guidance of 2022 adjusted earnings before interest and taxes of between $11.5 billion to $12.5 billion.

Ford on Wednesday updated its guidance to forecast full-year adjusted earnings before interest and taxes of about $11.5 billion. The automaker raised its full-year adjusted free cash flow forecast to between $9.5 billion and $10 billion – up from $5.5 billion to $6.5 billion – on strength in the company’s automotive operations.

Argo AI

Ford recorded a $2.7 billion non-cash, pretax charge on its investment in Argo AI, which the company initially invested in starting in 2017. It later split its ownership of Argo AI with German automaker Volkswagen in 2019.

Ford CFO John Lawler said the company is winding down the operations to focus on advanced driver-assist systems such as its BlueCruise hands-free highway driving system and other operations that aren’t considered “fully autonomous.”

“It’s become very clear that profitable, fully autonomous vehicles at scale are still a long way off,” he told reporters. “We’ve also concluded that we don’t necessarily have to create that technology ourselves.”

Some of the roughly 2,000 employees for Argo AI are expected to be offered positions at Ford or Volkswagen, officials said. Volkswagen said in a statement that it will no longer invest in Argo AI.

This story is developing. Please check back for updates.

– CNBC’s John Rosevear contributed to this report.

Sophie Tremblay

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