Coronavirus Drags Ford Into $2 Billion Quarterly Loss
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]
Join the conversation
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- 3SpeedAutomatic Drove a rental Cherokee for several days at the beginning of this year. Since the inventory of rental cars is still low, this was a 2020 model with 48k miles and V6. Ran fine, no gremlins, graphics display was easy to work, plenty of power, & very comfortable. Someone must of disarmed the lane assistance feature for the steering wheel never shook (YES!!!!!!!!). However, this woman's voice kept nagging me about the speed limit (what's new!?!?!?!).I was impressed enough to consider this a prime candidate to replace my 11 yr old Ford Escape. Might get a good deal with the close out of the model. Time will tell. 🚗🚗🚗
- Bullnuke One wonders if this poor woman entered the US through Roxham Road...
- Johnds Years ago I pulled over a vehicle from either Manitoba or Ontario in North Dakota for speeding. The license plates and drivers license did not come up on my dispatchers computer. The only option was to call their government. Being that it was 2 am, that wasn’t possible so they were given a warning.
- BEPLA My own theory/question on the Mark VI:Had Lincoln used the longer sedan wheelbase on the coupe - by leaning the windshield back and pushing the dashboard & steering wheel rearward a bit - not built a sedan - and engineered the car for frameless side windows (those framed windows are clunky, look cheap, and add too many vertical lines in comparison to the previous Marks) - Would the VI have remained an attractive, aspirational object of desire?
- VoGhost Another ICEbox? Pass. Where are you going to fill your oil addiction when all the gas stations disappear for lack of demand? I want a pickup that I can actually use for a few decades.
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.
Ford and GM just seem to hang around and survive while lurching from one "shakeup" to another.