Ford earnings rises despite UAW strikes in the third quarter
In the third quarter, Ford’s earnings increased, the company reported Thursday, a day after the United Auto Workers union reached a tentative deal to end its strike.
A year ago, the company earned $1.8 billion in adjusted earnings before interest and taxes, or EBIT. However, it fell short of the $2.6 billion forecast by Refinitiv.
The company’s revenue also increased by 11% to $43.8 billion.
On Wednesday, the company reached a tentative agreement with the UAW, ending the strike that began on September 15. In the near future, Ford’s 16,600 striking workers will return to work, though the exact timing will depend on when specific plants can restart.
Due to the union’s decision to expand the strike to three of the company’s assembly plants, about 45% of the company’s production had been shut down. At the time of the strike, only one of its plants had been closed for the final two weeks of the quarter.
During the just completed third quarter, Ford’s CFO John Lawler estimated EBIT was reduced by about $100 million due to the strike. Moreover, the company said it was likely to miss out on building and selling 80,000 vehicles that it had planned to build and sell during the year, which will reduce full-year EBIT by about $1.3 billion. The company withdrawn its guidance for the remainder of the year because of the uncertainty caused by the strike, even though most workers are close to returning to work, and it is now possible to estimate the overall cost of the new labor deal. There is still uncertainty caused by the strike, including how smoothly the plants will restart and how quickly Ford’s suppliers will be able to supply parts.