Ford pulls guidance, warns it will take $1.5bn hit from Trump's tariffs

Ford Motor suspended its annual guidance on Monday due to uncertainty about US President Donald Trump's tariffs, saying the levies would cost the company about $1.5bn (R27.42bn) in adjusted earnings before interest and taxes.

“It's still too early to fully understand our competitors' responses to these tariffs,” Ford CEO Jim Farley told analysts on Monday evening. “It's clear, however, that in this new environment, carmakers with the largest US footprint will have a big advantage.”

Ford reported this after the close of the US stock trading session, and its shares fell about 2.3% in after-hours trade.

The tariffs are expected to add $2.5bn (R45.70bn) in costs overall for the year, mainly related to expenses from importing vehicles from Mexico and China, Ford executives said. The carmaker suspended automotive exports to China, but still imports vehicles such as its Lincoln Nautilus from the country.

Company executives said it has been able to reduce about $1bn (R18.28bn) of that cost through various actions, including transporting vehicles from Mexico to Canada using bond carriers, so they are not subject to US tariffs.

In February, the Dearborn, Michigan carmaker projected earnings before interest and taxes of $7bn (R127.96bn) to $8.5bn (R155.38bn) for 2025. That forecast did not take tariffs into account.

The carmaker's CFO Sherry House said it was on track to meet that guidance, excluding the fallout from tariffs.

While rivals such as General Motors recently provided updated guidance, Ford executives said they have suspended the company's outlook until they have more clarity about the effect of retaliatory tariffs, as well as how consumers may react to price increases.

“It’s a bold move for them to withdraw guidance when GM gave revised guidance including tariffs, though to be fair things are very uncertain,” said Morningstar research analyst David Whiston.

Offsetting tariff costs

Ford's earnings per share fell to 14 cents in the first quarter, far surpassing LSEG (London Stock Exchange Group) analysts' estimate of 2 cents per share, but down from 49 cents a year earlier. Cost and quality improvements helped Ford beat expectations, executives said.

Earlier this year, the carmaker had warned that first-quarter results would be affected by production disruptions related to product launches at several plants. Net income fell sharply to $471m (R8.61bn) from $1.3bn (R23.76bn) a year earlier.

Ford's revenue fell 5% to $40.7bn (R743,997,294,260) in the quarter but beat expectations of about $36bn (R658,081,800,000). Earnings got a boost as consumers rushed to snatch up vehicles, concerned tariffs would lead to price hikes. Ford was one of a few carmakers that ran incentives to grab market share during this buying frenzy.

Trump's 25% tariffs on automotive imports were expected to add more than $100bn (R1.83-trillion) in costs for carmakers in the US this year, according to some estimates.

The president approved a reprieve last month on levies placed on automotive parts, providing car companies with credits for up to 15% of the value of vehicles assembled domestically, as well as relief from other duties.

This month GM cut its profit forecast and said tariffs were expected to cost it up to $5bn (R91.39bn).

“Investors have preferred Ford over GM, given Ford has a much higher mix of US sales that are assembled in the US,” Barclays analysts said in a note, citing Ford's 79% of US sales assembled in the country vs GM's 53%.

Jeep-maker Stellantis also suspended its guidance due to tariff uncertainty.

EV losses grow

On top of the headwinds from Trump's trade policy, Ford faces significant losses on its electric vehicles.

The carmaker this year projected losses of up to $5.5bn (R100.53bn) on its EV and software operations. It has already sustained more than $10bn (R182.79bn) in losses since 2023.

Reuters exclusively reported that Ford ended an expensive effort to build a next-generation electrical architecture for its vehicles called FNV4, after delays and mounting expenses stymied its development.

When asked about the report, Farley said the move is “a very significant save for capital efficiency”.

Ford Pro, the company's profitable commercial vehicle segment, posted first-quarter revenue of $15.2bn (R277.85bn), down 16% from a year ago.

Ford's petrol-engine division posted quarterly revenue of $21bn (R383.87bn). Its Model e division, which includes software and EV efforts, recorded revenue of $1.2bn (R21.94bn) for the three months.