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Ford cuts 2024 earnings guidance due to warranty costs and slow pace of cost cutting
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2024/10/26 22:51
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Stubbornly high warranty expenses and lagging cost-cutting efforts are holding back Ford Motor Co.'s profits this year, causing the company to lower its full-year earnings guidance.
That pushed the company’s stock price down 6% in trading after Monday’s closing bell.
The Dearborn, Michigan, automaker, which reported third-quarter earnings Monday, said its net profit tumbled nearly 26% as it took $1 billion in accounting charges to write down assets for a canceled three-row electric SUV.
Ford said it made $892 million from July through September, compared with $1.2 billion it made a year earlier.
But excluding the one-time items, the company made an adjusted pretax profit of $2.6 billion, or 49 cents per share. That beat analyst estimates of 46 cents, according to FactSet.
Revenue rose 5.5% to $46.2 billion, also beating Wall Street predictions. Ford reduced its full-year pretax income guidance to $10 billion, at the low end of the $10 billion to $12 billion it expected at the end of the second quarter, spooking investors.
“Cost, especially warranty, has held back our earnings power, but as we bend that curve, there is significant financial upside for investors,” CEO Jim Farley told analysts on a conference call.
Chief Financial Officer John Lawler said warranty costs were slightly below the third quarter of last year, but still high. The company wouldn’t give numbers until it files its quarterly report with securities regulators on Tuesday but said costs will be higher than a year ago.
Ford reported $800 million of increased warranty costs for the second quarter of this year.
Farley has been trying to get a handle on warranty costs for the past four years. In October of 2020, he said the company was working to cut quality-related repairs after glitch-prone small-car transmissions hit the automaker’s bottom line.
Ford has said that it has a $7 billion cost gap with competitors, and Lawler said Monday it has made progress on that figure. The problem is competitors, which he did not identify, are cutting costs too. “We’ve taken cost out, but we’re not doing it at a pace faster than our competition,” he told analysts.
Ford has removed $2 billion in material, freight and labor costs this year, but that was offset by warranties and inflation at its Turkish joint venture, he said.
He said Ford is focused on reducing warranty and other costs, which will show up in later quarters.
The company’s plans are working, as evidenced by 10 straight quarters of revenue growth, Lawler said.
Farley said Ford has restructured its operations in Europe, South America, India and China, which collectively lost $2.2 billion in 2018 but together are profitable now. For instance, China, including exports, has contributed over $600 million to pretax earnings this year, Farley said. |
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Top Europe rights court condemns Switzerland in landmark climate ruling
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2024/04/11 22:03
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Europe’s highest human rights court ruled Tuesday that countries must better protect their people from the consequences of climate change, siding with a group of older Swiss women against their government in a landmark ruling that could have implications across the continent.
The European Court of Human Rights rejected two other, similar cases on procedural grounds — a high-profile one brought by Portuguese young people and another by a French mayor that sought to force governments to reduce greenhouse gas emissions.
But the Swiss case, nonetheless, sets a legal precedent in the Council of Europe’s 46 member states against which future lawsuits will be judged.
“This is a turning point,” said Corina Heri, an expert in climate change litigation at the University of Zurich.
Although activists have had success with lawsuits in domestic proceedings, this was the first time an international court ruled on climate change — and the first decision confirming that countries have an obligation to protect people from its effects, according to Heri.
She said it would open the door to more legal challenges in the countries that are members of the Council of Europe, which includes the 27 EU nations as well as many others from Britain to Turkey.
The Swiss ruling softened the blow for those who lost Tuesday.
“The most important thing is that the court has said in the Swiss women’s case that governments must cut their emissions more to protect human rights,” said 19-year-od Sofia Oliveira, one of the Portuguese plaintiffs. “Their win is a win for us, too, and a win for everyone!”
The court — which is unrelated to the European Union — ruled that Switzerland “had failed to comply with its duties” to combat climate change and meet emissions targets. |
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Elon Musk will be investigated over fake news and obstruction in Brazil
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2024/04/08 22:18
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A crusading Brazilian Supreme Court justice included Elon Musk as a target in an ongoing investigation over the dissemination of fake news and opened a separate investigation late Sunday into the executive for alleged obstruction.
In his decision, Justice Alexandre de Moraes noted that Musk on Saturday began waging a public “disinformation campaign” regarding the top court’s actions, and that Musk continued the following day — most notably with comments that his social media company X would cease to comply with the court’s orders to block certain accounts.
“The flagrant conduct of obstruction of Brazilian justice, incitement of crime, the public threat of disobedience of court orders and future lack of cooperation from the platform are facts that disrespect the sovereignty of Brazil,” de Moraes wrote.
Musk will be investigated for alleged intentional criminal instrumentalization of X as part of an investigation into a network of people known as digital militias who allegedly spread defamatory fake news and threats against Supreme Court justices, according to the text of the decision. The new investigation will look into whether Musk engaged in obstruction, criminal organization and incitement.
Musk has not commented on X about the latest development as of late Sunday.
Brazil’s political right has long characterized de Moraes as overstepping his bounds to clamp down on free speech and engage in political persecution. In the digital militias investigation, lawmakers from former President Jair Bolsonaro’s circle have been imprisoned and his supporters’ homes raided. Bolsonaro himself became a target of the investigation in 2021.
De Moraes’ defenders have said his decisions, although extraordinary, are legally sound and necessary to purge social media of fake news as well as extinguish threats to Brazilian democracy — notoriously underscored by the Jan. 8, 2023, uprising in Brazil’s capital that resembled the Jan. 6, 2021 insurrection in the U.S. Capitol.
On Saturday, Musk — a self-declared free speech absolutist — wrote on X that the platform would lift all restrictions on blocked accounts and predicted that the move was likely to dry up revenue in Brazil and force the company to shutter its local office.
“But principles matter more than profit,” he wrote.
He later instructed users in Brazil to download a VPN to retain access if X was shut down and wrote that X would publish all of de Moraes’ demands, claiming they violate Brazilian law. Musk had not published de Moraes’ demands as of late Sunday and prominent blocked accounts remained so, indicating X had yet to act based on Musk’s previous pledges. |
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Retired Supreme Court Justice Anthony M. Kennedy has memoir coming
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2024/04/04 22:54
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Retired Supreme Court Justice Anthony M. Kennedy has a two-volume memoir coming out this fall, tracking his life from growing up in California to his 30 years on the court, when he cast key votes on landmark cases ranging from abortion to gay marriage to campaign finance.
Simon & Schuster announced Tuesday that Kennedy’s “Life and Law: The Early Years” and “Life and Law: The Court Years” will be published Oct. 1, as a boxed set and in individual editions, each around 320 pages. Kennedy was widely regarded as a moderate conservative who wrote the majority opinion on such closely divided cases as Obergefell v. Hodges, which found a constitutional right to same-sex marriage, and Citizens United v. Federal Election Commission, which allowed corporations and other outside entities to spend unlimited money on election campaigns.
“In ‘Life and Law,’ he explains the why’s and how’s of judging,” Simon & Schuster’s announcement reads in part.
“The second volume is filled with moving portraits of Justices O’Connor, Rehnquist, Scalia and Ginsburg that go along with the account of how Kennedy decided his views in the landmark cases. But it is the first volume about his youth in Sacramento and his decade as a practicing lawyer that explains the judicial giant. Readers will see the child who turns into the man, who shaped America as much as any Washington figure in the 21st century.”
Kennedy, 87, noted in the preface to the first volume that his memoirs proved more expansive than originally planned.
“It was my intent (my right hand is raised to swear it so) to recount my earlier years in a summary way. But something happened on the way to the pencil,” he wrote. “More and more of my recollections turned to how our society and its mindset changed in fascinating ways from the ’40s and ’50s to the ’60s and then again in the ’70s. This seemed relevant to the dynamics that influenced me and our larger society.”
“As each day passes, we should strive to learn more about who we are and whom we should strive to become,” he added. “Writing a memoir is a formal way to do this.”
Kennedy was an associate justice from 1988-2018 and his arrival and departure proved equally newsworthy.
He was appointed to the court by President Ronald Reagan, but only after the Senate had voted down Reagan’s first choice, Robert Bork, and after the second choice, Douglas Ginsburg, withdrew amid reports he had smoked marijuana. When Kennedy announced in 2018 that he was stepping down, President Donald Trump nominated a former Kennedy law clerk, Brett Kavanaugh, who was narrowly approved by the Senate after contentious confirmation hearings that included allegations Kavanaugh had assaulted a high school acquaintance, Christine Blasey Ford.
Kennedy’s book will arrive soon after Justice Ketanji Brown Jackson’s memoir “Lovely One,” which comes out Sept. 3. |
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