Amid Virus Chaos, Ford Erects Financial Firewall

Looking to cover its financial ass with available cash, Ford Motor Company announced a series of measures on Thursday to ease it through the ongoing pandemic.

If you’re a shareholder, kiss that dividend goodbye. However, if you’re in the mood to skip the toilet paper line outside Costco and head to the dealer instead, the Blue Oval has an offer for you.

The biggest financial move is the addition of over $15 billion of cash to the automaker’s balance sheet, drawn from two credit lines, to cover the planned shutdown of all U.S. assembly plants (to say nothing of planning for an even rainier day in the near future). Further cash protection comes from the automaker’s decision to suspend its dividend.

As for the company’s guidance for the current year, that performance prediction is null and void.

“Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” Ford CEO Jim Hackett said in a statement. “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”

At the end of 2019, Ford had $22 billion in cash on hand.

“The company will provide an update on the year when it announces first-quarter results, which is currently scheduled for April 28,” Ford announced.

As the fast-moving coronavirus pandemic leaves markets and manufacturers in disarray, Ford announced the suspension of production at its European and North American assembly plants earlier this week. The shutdowns could easily go longer than planned. In fact, given the nature of the virus, it would be unusual to not see the idle period extended (or re-imposed in the future).

On the buy side, Ford hopes to lure hesitant customers into showrooms with a three-month payment deferral, bolstered by three additional months paid for by the manufacturer. That effort falls under the eye-rolling banner of Ford’s “Built to Lend a Hand Program.” All 2019 and 2020 model-year Ford vehicles apply, minus the big-bucks, high-margin 2020 Ford Super Duty line.

[Image: Ford]