Associated Press
- Ford shares fell as much as 10% on Thursday as the company expects a 50% hit to second-quarter production.
- The company said a global shortage of semiconductors will be a potential drag on its output.
- Ford said a fire at a Japanese chip supplier worsened the shortage situation.
- See more stories on Insider's business page.
Ford shares tumbled to a two-month low Thursday after the vehicle maker said a worldwide shortage in semiconductors will slash its quarterly production.
The company joins others in saying that lack of chip supplies has affected operations. Apple CEO Tim Cook said it has been forced to delay iMac and iPad production and Tesla CEO Elon Musk told investors the electric vehicle maker has had "insane difficulties" with its supply chain over the last quarter.
Ford updated its 2021 outlook to account for "expanded consequences from the semiconductor shortage" that's been made worse by a fire at a supplier plant in Japan.
"Largely because of the additional effect of the supplier fire, Ford now expects to lose about 50% of its planned second-quarter production, up from 17% in the first quarter — again, implying that Q2 will be the trough of the issue," Ford said in its first-quarter earnings report issued Wednesday.
Ford shares fell as much as 10.3% to $11.14 then pared the loss to 8% during the session. The shares during Thursday's dealings fell to their lowest since late January.
The company expects chips from the Japanese supplier to resume by the end of the second quarter, but "the broader global semiconductor shortage may not be fully resolved until 2022," said Ford, adding that it now expects to lose 10% of planned production for the second half of 2021.
Ford foresees losing about 1.1 million units of production this year to the chip shortage. It forecast full-year 2021 adjusted EBIT of $5.5 billion and $6.5 billion, including an adverse effect of about $2.5 billion from the semiconductor shortage.
Ford on Wednesday swung to first-quarter net income of $3.3 billion, its strongest profit since 2011, with adjusted pre-tax profit coming in at $4.8 billion.
Shares of Ford were among the steepest decliners on the S&P 500 index on Thursday.