Ford Cuts 2016 Earnings Forecast as It Expands Latch Recall

New Ford Mondeo Automobile Production Line At Ford Inc.'s Russia Plant
Photographer: Andrey Rudakov/Bloomberg
  • Automaker now sees annual pretax profit of $10.2 billion
  • Door parts to be replaced in almost 2.4 million vehicles

Ford Motor Co. cut its 2016 pretax profit forecast to about $10.2 billion from at least $10.8 billion because of the cost of an expanded recall of faulty door latches.

The recall will cost about $640 million, which will be booked in its third-quarter earnings, Ford said Thursday in a U.S. Securities and Exchange Commission filing. The company had said in July that this year’s pretax profit would match or exceed last year’s $10.8 billion but that the outlook was “at risk” due to slowing sales and rising costs. Ford said it still expects pretax profits in the third quarter to be about 10 percent of its full-year earnings.

Ford said it is expanding the door latch recall to almost 2.4 million vehicles in North America, an increase of 1.5 million, at the request of the U.S. National Highway Traffic Safety Administration. The Dearborn, Michigan-based automaker said a side-door latch could break, possibly resulting in the door opening while the vehicle is moving. Ford said it has identified one accident and three injuries that may be related to the faulty latches.

The recalled vehicles include 2013-15 Ford C-Max cars and Escape sport utility vehicles, 2012-15 Focus cars, 2015 Mustang cars and Lincoln MKC SUVs and 2014-16 Transit Connect vans. Dealers will replace the latches, the automaker said.

Ford shares rose 0.1 percent to $12.71 at 12:14 p.m. in New York. They declined 9.9 percent this year through Wednesday.

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