Ford reinstates 2023 guidance, says UAW deal to cost $8.8 billion

Members of the United Auto Workers union picket outside the Michigan Assembly Plant in Wayne, Michigan, on Sept. 26, 2023.

Matthew Hatcher | AFP | Getty Images

NEW YORK – Ford Motor on Thursday reinstated 2023 guidance after pulling its forecast last month due to the impacts of labor strikes and negotiations with the United Auto Workers union.

The guidance calls for $10 billion to $10.5 billion in adjusted earnings before interest and taxes, or EBIT, and adjusted free cash flow of between $5 billion and $5.5 billion. That compares to its previously announced guidance that included adjusted-EBIT of between $11 billion and $12 billion and adjusted free cash flow of $6.5 billion to $7 billion.

Ford said the new UAW labor agreement is expected to cost $8.8 billion over the life of the contract, which expires in April 2028.

Prior to the UAW strikes, which ended after roughly six weeks, Ford was “poised” to hit its guidance, Chief Financial Officer John Lawler said Oct. 26 during the company’s third-quarter earnings report.

At that time, Lawler said the UAW strike had already cost the company $1.3 billion in earnings due to lost production of about 80,000 vehicles, including roughly $100 million during the third quarter. On Thursday he updated that impact amount to $1.7 billion, including $1.6 billion in the fourth quarter.

Also in October Lawler said the UAW deal was expected to add $850 to $900 per vehicle assembled. He said Ford would work to “find productivity and efficiencies and cost reductions throughout the company” to offset the additional costs and deliver on previously announced profitability targets.

The company said it plans to cancel or postpone $12 billion in investments related to electric vehicles.

Ford’s update comes a day after General Motors said it planned to increase its quarterly dividend next year by 33% to 12 cents per share; initiate an accelerated $10 billion share repurchase program; and reinstate its 2023 guidance to include an estimated $1.1 billion in earnings before interest and tax, or EBIT-adjusted, impact from the UAW strikes.

GM’s reinstated guidance included net income attributable to stockholders of $9.1 billion to $9.7 billion; adjusted EBIT of $11.7 billion to $12.7 billion; and adjusted earnings per share of roughly $7.20 to $7.70.

Both UAW agreements include at least 25% hourly pay raises, the reinstatement of cost-of-living adjustments and enhanced profit-sharing payments, among other benefits.

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