Ford Motor Co. (F) shares slumped lower Monday after the carmaker unveiled sweeping job cuts and investors reacted to the potential impact of a $1.7 billion jury award in a long-running case linked to safety issues in its F-250 pickup.
Ford said in a memo to employees Monday that it will eliminate up to 3,000 jobs, effective September 1, with the bulk of the reductions coming from salaried employees in the U.S. and Canada. Around 1,000 jobs will go at the group's Ford Business Solutions division in India, the memo said.
The cuts come just shortly after Ford reiterated its full-year profit forecasts, but cautioned that surging input costs and currency headwinds would pressure near-term margins. Ford is also betting that pricing power, along with robust demand, particularly for its just-launched F-150 Lightning, will offset supply constraints and the impact of Russia's war on Ukraine on its business in Europe.
Ford also detailed plans in early June to invest $3.7 billion in new facilities in Michigan, Ohio and Missouri, most of it focused on EVs, while creating an estimated 74,000 new direct and indirect new jobs. The spending forms part of Ford's previously-announced $50 billion in new EV investments, spread over the next five years, that were unveiled in March.
"We absolutely have too many people in certain places, no doubt about it," Farley told investors on a conference call following the group's second quarter earnings. "And we have skills that don't work anymore. We have jobs that need to change."
Ford shares were marked 4.6% lower in early afternoon trading to change hands at $15.16 each, a move that would extend their six-month decline to around 12.6%.
Ford shares were also pressured by news that a jury in Georgia awarded plaintiffs in a decade-old case involving a fatal crash of an F-250 pickup $1.7 billion in punitive damages.
The family of Voncile and Melvin Hill, who were killed when their F-250 rolled over in 2002 following a blown front tire, were awarded the damages on Friday following a six-week trial in the state. Ford has said it will appeal.
Late last month, reported stronger-than-expected second quarter earnings, while confirming its full-year profit guidance, even as it cautioned on surging costs.
Ford said its adjusted earnings for the June quarter rose more than five-fold from last year to 68 cents per share, well ahead of Street forecasts, as price increases offset input cost pressures and currency headwinds. Group revenues, Ford said, surged 66.5% to $40.22 billion, with first half free-cash flow estimated at around $3 billion.
The group also lifted its quarterly dividend to 15 cents per share, taking the payout level back to pre-pandemic levels.
