Ford expects coronavirus shutdown to cause US$600m quarterly loss
Ford Motor Co said on Monday it expects to post a pretax loss of about US$600m (about R10.9bn) for the first quarter as the coronavirus outbreak pummeled its sales and shuttered vehicle assembly plants, resulting in a 21% drop in vehicle sales to dealers versus the same quarter in 2019.
The news sent Ford's shares down more than 5% in morning trading.
Only Ford’s joint ventures in China, where the Covid-19 pandemic has been receding, are currently producing vehicles. The car maker said it is working on a scenario for a phased restart of its manufacturing plants beginning in the second quarter.
“However, we believe we have sufficient cash today to get us through at least the end of the third quarter with no incremental vehicle production and wholesales or financing actions,” CFO Tim Stone said in a statement.
Asked whether Ford would apply for loans from the US government or the Federal Reserve to sustain its operations for longer if needed, a spokesperson for the car maker said that unlike during the Great Recession — when financing dried up — there is still plenty of liquidity in the capital markets.
“We have a broad range of options” for obtaining additional financing if needed, the spokesperson said.
As of April 9, Ford said it had about $30bn (roughly R544bn) in cash on its balance sheet, including $15.4bn it borrowed last month against two existing credit lines.
Ford said any decisions on restarting its plants will be made “in co-operation with local unions, suppliers, dealers and other stakeholders”.
In March, the company shuttered plants in North America and Europe due to the spreading pandemic.
Earlier this month, the No. 2 US car maker said its first-quarter US sales had fallen 12.5% during the quarter. The US market, with its highly profitable pickup truck and SUV segments, generates the overwhelming majority of Ford's profits.
Ford's US sales chief Mark LaNeve said on April 2 that Ford believes some level of government stimulus will be needed for American consumers once the Covid-19 pandemic recedes.
Ford said it expects its first-quarter adjusted loss before interest and taxes to be about $600m (roughly R10.9bn), compared with a profit of $2.4bn (roughly R43.5bn) a year ago.
The company said it expects to report revenue of about $34bn (R616.6bn) for the quarter.
In morning trade, Ford shares were down 30 cents, or 5.6%, at $5.09 (R92.31).
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