Ford Motor swings to £1.61 billion loss in Q1 due to Coronavirus pandemic
- Ford Motor's net revenue declines by 14.9% in the first quarter due to Coronavirus shutdowns.
- The American multinational automaker burns through £1.77 billion in cash in the first quarter.
- Ford suspends its full-year financial guidance and quarterly dividend on COVID-19 uncertainty.
The Coronavirus pandemic has brought global auto sales to a near halt that is weighing heavily on the car manufacturers. On Tuesday, Ford Motor (NYSE: F) highlighted a massive £1.61 billion loss in Q1 and said that losses are likely to widen in the second quarter as the ongoing health crisis makes it difficult to reopen factories.
Ford’s pre-tax loss adjusted for 1-time items printed at £509 million in Q1. In the upcoming quarter, the company added, this loss is expected to top £4 billion.
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Following the dovish statement, Ford was reported around 6% down in after-hours trading on Tuesday.
Ford’s net revenue declines by 14.9% in Q1
At £27.62 billion, the car manufacturer’s net revenue came in 14.9% lower in Q1 as compared to the same quarter last year. According to the company:
“The pandemic weighed on Ford’s performance as protecting people and helping society respond to the crisis became primary measures of current success alongside balance-sheet management and operational excellence.”
The automaker burned through £1.77 billion in cash in the first quarter. Ford is expecting to start resuming production at its domestic factories at the start of May but warns that the impact of the health crisis will be the most pronounced in Q2.
As per CFO Tim Stone, Ford Motor had roughly £28 billion in cash on April 24th excluding payments to suppliers. The company’s cash reserve, Stone added, is sufficient to get through the year without production.
In a statement earlier this month, the American multinational car maker announced to have sold around £6.44 billion worth of bonds. The company also withdrew £12.40 billion from 2 of its existing credit facilities in March.
Ford suspends full-year financial guidance and quarterly dividend
Amidst the financial struggles, the company reaffirmed its £8.86 billion restructuring plan. Citing the rising COVID-19 uncertainty, however, Ford withdrew its full-year financial guidance and suspended quarterly dividend to shore up its financial stature.
According to Ford Motor, its vehicle sales were 12.5% down in the first quarter as compared to the year-ago figure. As per IHS Markit, global vehicle sales are likely to drop by 22% in 2020. The greatest decline is expected in the U.S at 26.6% as compared to 2019.
At £4.16 per share, Ford is currently around 45% down year to date in the stock market. The £17.30 billion company recorded an annual gain of more than 15% last year.