Ford Expects Loss But Says Cash Position Strong

Ford Motor said Monday it expects to lose $600 million in the first quarter but has enough cash to see it through at least the next six months even if it can’t produce vehicles due to the coronavirus shutdown.

The automaker detailed the impact of the virus in a preliminary release of its first-quarter earnings that also showed vehicle wholesales were down 21% compared with a year ago, “largely as a result of lower production and demand related to the coronavirus.”

Total revenue for the first quarter is expected to be about $34 billion, down 15.7% from $40.3 billion a year ago, and adjusted earnings before interest and taxes are expected to be a negative $600 million. In the year-ago period, Ford made a profit of $2.4 billion.

In trading Monday, Ford shares fell 4.6% to $5.13, extending the stock’s losses for the year to more than 40%. But according to The Motley Fool, the news about Ford’s cash-burn rate “should give Ford investors some reassurance.”

As of April 9, the company had about $30 billion in cash on its balance sheet, including $15.4 billion of proceeds from borrowings last month against two existing credit lines.

“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 news release.

Ford, like other automakers, closed nearly all of its factories around the world in the first quarter as the novel coronavirus spread from China to Europe and North America. As of Monday, only its factories in China have reopened.

In March, Ford suspended its $600 million regular quarterly dividend and share repurchase program to conserve cash. It has been taking other cash-saving steps, including lowering operating costs, reducing capital expenditures, and deferring portions of executive salaries.

“We continue to opportunistically assess all funding options to further strengthen our balance sheet and increase liquidity to optimize our financial flexibility,” Stone said. “We also are identifying additional operating actions to enhance our cash position.”

automaker, coronarivus, Ford Motor, shutdown, Tim Stone