Ford expects $5 billion loss in current quarter as coronavirus hits demand
Ford Motor Co said its second-quarter loss would more than double to over $5 billion from $2 billion in the first quarter due to the impact of the coronavirus pandemic, but added it had enough money despite the crisis to last the rest of 2020, Trend reports citing Reuters.
“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,” Chief Financial Officer Tim Stone said in a statement.
But he called the current economic environment “too ambiguous” for the No. 2 U.S. automaker to give a full-year 2020 earnings forecast.
“There’s no denying the negative economic consequences of a pandemic,” Chief Executive Jim Hackett said on a conference call with analysts.
The Dearborn, Michigan-based company has slashed costs during the COVID-19 outbreak to weather the shutdown, including cutting salaries of executives and white-collar employees.
Ford also moved to cut spending on projects, saying on Tuesday it was pushing back its commercial autonomous vehicle services by a year to 2022 and that it had decided not to develop a previously announced luxury electric Lincoln sport utility vehicle in partnership with electric vehicle maker Rivian.
Ford shares were down more than 4.6% in after-hours trading on Tuesday after closing the regular session at $5.38.
Ford’s market value of $20.6 billion is now less than the $35 billion in cash it had on hand as of last Friday, an indication that investors expect the company to burn through significant amounts of cash before a recovery takes hold.
Ford had preannounced the pandemic-fueled first-quarter loss earlier this month. That warning came the same day the company raised $8 billion from corporate debt investors.
Last month, Ford moved to hoard cash on its balance sheet, drawing down $15.4 billion from two credit lines and suspending its dividend, in a move to bolster reserves to ride out damage to its business.