Ford Motor (F) -) shares moved lower Thursday after the carmaker followed General Motors (GM) -) 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 pegged the overall cost increase for it UAW deal, which also boosted pay by around 25%, at around $9.3 billion.
Ford CFO: 'Some companies will be left behind'
“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,” said Ford Chief Financial Officer John Lawler.
“Ford+ is the right strategy to win – we’ve got a highly talented team that allocates capital with great discipline, so that we’re executing with consistency," he added.
Ford shares were marked 3.5% lower in afternoon trading and changing hands at $10.22 each, a move that would extend the stock's six-month decline to around 15%.
Related: General Motors surges on dividend boost, $10 billion buyback, new profit outlook
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.
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