Coronavirus Drags Ford Into $2 Billion Quarterly Loss

Steph Willems
by Steph Willems

Call it the coronavirus crash. Ford Motor Company released its first-quarter 2020 financial results late Tuesday, revealing a deep dip into the red as March’s production shutdown and and domestic (and overseas) sales dive ate into earnings.

Free cash flow was negative $2.2 billion last quarter, Ford said, as it reported a net loss of $2 billion. Recall that a big deal was made over the company’s less-than-stellar Q4 2019 earnings report, which carried the weight of recalls and a botched product launch. That report now looks rosy.

As bad as Q1 2020 looks, Ford cautioned investors to brace themselves for an even grimmer Q2.

“According to [chief financial officer Tim Stone], today’s economic environment remains too ambiguous to provide full-year 2020 financial guidance. He said the company expects second-quarter adjusted EBIT to be a loss of more than $5 billion, as year-over-year industry volumes decline significantly in every region,” the automaker stated in its report.

Ford’s pre-tax loss in Q1 2020 was $632 million, with the actual dollar figure of the coronavirus impact pegged at $2 billion. The virus cratered sales in China in mid-January, lasting into February, while the European market followed the People’s Republic into lockdown a month after the initial Wuhan outbreak. North America fell like a domino in mid-March.

Being by far the automaker’s biggest revenue generator, the lingering impact of lockdown orders in the U.S. and Canada will push the worst of the hurt into the second quarter of the year (the region’s earnings before interest and taxes last quarter was not in the red). All that said, Ford says cash isn’t a problem. The company drew more than $15 billion from credit lines and issued $8 billion in bonds to firm up its position and weather the storm.

“We’ve taken decisive actions to lower our costs and capital expenditures and been opportunistic in strengthening our balance sheet and optimizing our financial flexibility,” Stone said. “We believe the company’s cash is sufficient to take us through the end of the year, even with no additional vehicle wholesales or financing actions.”

Jim Farley, Ford’s chief operating officer, said the company’s team in China “did a very good job managing through the crisis and provided us with a valuable template for bringing back up operations in the rest of the world” — useful stuff for the automaker’s phased restart of production in Europe, scheduled to commence next week.

In the U.S., Ford is rumored to be aiming for a May 18th restart date, following a kiboshed plan to fire up only a select few plants earlier in April.

[Image: Chris Tonn/TTAC]

Steph Willems
Steph Willems

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  • Jeff S Jeff S on Apr 29, 2020

    Doesn't help Ford to have recalls on new models they have just introduced--Escape, various Lincolns, Edges, Explorers, and Rangers. Ford needs to get these products right especially for new product launches. Ford also needs to introduce less costly versions of some of their products. A less costly and more base Ranger would be good and price it at 19k.

    • See 2 previous
    • Brn Brn on Apr 30, 2020

      @EBFlex New drive train, new frame. Far from a 2012 model. You're probably thinking of the Toyota Taco.

  • Thelaine Thelaine on Apr 29, 2020

    Ford and GM just seem to hang around and survive while lurching from one "shakeup" to another.

  • ToolGuy Personally I have no idea what anyone in this video is talking about, perhaps someone can explain it to me.
  • ToolGuy Friendly reminder of two indisputable facts: A) Winners buy new vehicles (only losers buy used), and B) New vehicle buyers are geniuses (their vehicle choices prove it):
  • Groza George Stellantis live off the back of cheap V8 cars with old technology and suffers from lack of new product development. Now that regulations killed this market, they have to ditch the outdated overhead.They are not ready to face the tsunami of cheap Chinese EVs or ready to even go hybrid and will be left in the dust. I expect most of their US offerings to be made in Mexico in the future for good tariff protection and lower costs of labor instead of overpriced and inflexible union labor.
  • MaintenanceCosts This is delaying an oil change for my Highlander by a couple of weeks, as it prevented me from getting an appointment before a business trip out of town. Oh well, much worse things have happened.I also just got a dealership oil change for my BMW (thanks, loss-leader prepaid plans!) and this didn't seem to affect them at all.
  • Kwik_Shift_Pro4X Gonna need more EV fuel.