Ford expects its first quarter 2020 net loss to far exceed the previously-estimated $600 million as the Coronavirus pandemic continues to negatively impact business operations, including production and sales.
The Coronavirus pandemic continues to wreck havoc on most every aspect of our daily lives, but it’s also having a particularly devastating impact on automotive manufacturers. After previously warning investors of a $600 million pre-tax loss in the first quarter of 2020, Ford now expects a net loss of $2 billion in Q1 on revenue of $34 billion, roughly 16 percent lower than the $40.3 billion in generated during the year-ago quarter, the automaker disclosed in an amended filing with the Securities and Exchange Commission.
Ford CFO, Tim Stone, said that the automaker has enough cash on hand to get through “at least the end of the third quarter with no incremental vehicle production and wholesales or financing actions.” The company also filed for an undisclosed debt offering last Friday, April 17th. Ford previously showed $30 billion in cash on its balance sheet as of April 9th, $15.4 billion of which was borrowed from two credit lines in March. The Dearborn-based automaker also suspended its dividend to conserve cash during the pandemic.
Wall Street seemingly wasn’t phased by the news, however, as Ford shares gained 2.2 percent early Friday morning, reaching $5.05. However, the company’s stock is down 45 percent year to date.
The news also comes on the heels of a devastating South Carolina tornado strike at a BorgWarner facility, which sustained heavy damage. The plant is an important component of Ford’s supply chain, producing transfer cases for some of The Blue Oval’s most popular vehicles, including the F-Series, Explorer and Expedition. So far there’s been no specific indication as to when the plant might be able to reopen, nor the extent of the damage. But this, coupled with the ongoing pandemic, could certainly lead to even worse Q2 results.
In the meantime, The Blue Oval continues to negotiate with the United Auto Workers (UAW) union to determine a reopening date for for Ford plants in the U.S. As of now, production is expected to resume some time in the second quarter.
Ford is scheduled to report its Q1 2020 financial results on April 28th. Ford Authority will be on hand to cover the results, so be sure to subscribe to Ford Authority for the latest Ford-related COVID-19 news, Ford earnings news, Ford business news and ongoing Ford news coverage.