Ford Motor gains after updating guidance with UAW deal impact

Ford Motor Company (NYSE: F) considered the effects of the new United Auto Workers contract before releasing a business report on Thursday.

The Detroit carmaker now projects a full-year adjusted EBIT of between $10.0 billion and $10.5 billion. The EBIT total includes $1.7 billion in missed profits attributable to strikes that caused the manufacturing of high-margin trucks and SUVs to be suspended. A full-year adjusted free cash flow of $5.0 billion to $5.5 billion was also anticipated by Ford (F). Ford (F), in contrast, produced $9.4 billion in adjusted EBIT and $4.9 billion in net income over the first three quarters of the year.

According to Ford Motor (F), the cost of the new labor agreement between the United States and the United Auto Workers (UAW) is anticipated to be $8.8 billion throughout the contract. The three main components of this total are cost of living adjustments, rapid wage progression, and gross wages. According to Chief Financial Officer John Lawler, Ford plans to mitigate the cost impact through increased productivity and reduced expenses. By 2028, the cost effect is estimated to be roughly $900 per vehicle or 60 to 70 basis points of adjusted EBIT margin.

“This industry is going through the biggest technology-led transformation we’ve ever seen and some companies, new and old, are going to be left behind,” stated Lawler.

In premarket trading on Thursday, shares of Ford Motor (F) increased by 1.59%, following a 2.12% increase on Wednesday following the release of General Motors’ (GM) post-UAW transaction projection update.