Ford to Follow Up a Less-than-stellar Earnings Report With an Even Worse One

Much earlier this year, Ford had the unpleasant task of presenting investors and analysts with an earnings report that reflected two serious headaches. The botched launch (and expensive repair effort) of the 2020 Ford Explorer and Lincoln Aviator weighed heavily on the automaker’s balance sheet in the final quarter of 2019, and a flurry of sizable recalls didn’t help things, either.

Today, Ford’s most pressing issue has nothing to do with quality. In a pre-earnings announcement Monday, the automaker told investors to expect a pretty unpleasant report at the end of the month.

As plants remain shuttered across North America and customers stay away from dealerships that may or may not be open, Ford says its expects an adjusted pre-tax loss of $600 million in the first quarter of 2020. Not included in that $600 million figure is $300 million in special items. The company also said it expects a 15.7-percent drop in revenue.

Ford’s earnings report will see the light of day on April 28th.

As you’d expect, Wall Street reacted negatively to the announcement, with the automaker’s stock falling nearly 6 percent in Monday morning trading. A run of bad news, and in this case luck, prompted Ford’s share price to drop more than 40 percent since the start of the year — exactly the opposite of Jim Hackett’s intent when he came aboard as CEO. Boosting the company’s stock has proven a near-impossible challenge, even before the launch issues of late 2019.

The current circumstance is exceptional, and at least Ford’s not alone in it. Big-ticket product is still on the way, and one day the company’s American assembly plants will reopen, along with dealers. The automaker said that, while the pandemic has caused financial damage, it’s well-prepared to handle the fallout.

As of April 9th, Ford had $30 billion in available cash, bolstered by an extra $15.4 billion sourced from two credit lines late last month.

“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,” said Ford Chief Financial Officer Tim Stone, adding that, “We also are identifying additional operating actions to enhance our cash position.”

[Image: Chris Tonn/TTAC]