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% to $12.71 at 12:14 p.m. in New York. They declined 9.9% this year through Wednesday.
Also today, Ford announced it will add John S. Weinberg, a former Goldman Sachs Group Inc. vice chairman whose grandfather helped take the automaker public in 1956, to its board.
Weinberg, 59, will join Ford’s board on Oct. 1, the company said in a statement Thursday. He retired from Goldman last year after more than three decades at the firm. While at Goldman, Weinberg advised Ford for more than 15 years, as well as working with General Electric Co. and Boeing Co. and leading the firm’s team on initial public offerings for Visa Inc. and Under Armour Inc., the automaker said.
“John is a trusted advisor with a deep understanding of Ford, our history and the future needs of our business,” Bill Ford, executive chairman and great-grandson of founder Henry Ford, said in a statement. Weinberg brings expertise in finance, banking and the capital markets, he said.
Weinberg’s grandfather, Sidney Weinberg, ran Goldman from the Great Depression until 1969 and worked with Henry Ford II on the automaker’s initial public offering 60 years ago. Weinberg’s father, John L. Weinberg, was senior partner and chairman of the firm from 1976 to 1990.
As Weinberg was leaving Goldman last year, Ford Chief Executive Officer Mark Fields said: “We appreciate all of the support he has given us, wish him all the best and look forward to the opportunity to work with him again in the future.”