Ford Motor Co said on Monday it expects to post a pre-tax loss of about $600 million for the first quarter as the coronavirus outbreak pummelled its sales and shuttered vehicle assembly plants, resulting in a 21% drop in vehicle sales to dealers versus the same quarter in 2019.
The news sent Ford’s shares down more than 5% in morning trading.
Only Ford’s joint ventures in China, where the COVID-19 pandemic has been receding, are currently producing vehicles. The automaker said it is working on a scenario for a phased restart of its manufacturing plants beginning in the second quarter.
“However, 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,” Chief Financial Officer Tim Stone said in a statement.
Asked whether Ford would apply for loans from the U.S. government or the Federal Reserve to sustain its operations for longer if needed, a spokesman for the automaker said that unlike during the Great Recession – when financing dried up – there is still plenty of liquidity in the capital markets.
“We have a broad range of options” for obtaining additional financing if needed, the spokesman said.
As of April 9, Ford said it had about $30 billion in cash on its balance sheet, including $15.4 billion it borrowed last month against two existing credit lines.
Ford said any decisions on restarting its plants will be made “in co-operation with local unions, suppliers, dealers and other stakeholders.”
In March, the company shuttered plants in North America and Europe due to the spreading pandemic.
Earlier this month, the No. 2 U.S. automaker said its first-quarter U.S. sales had fallen 12.5% during the quarter. The U.S. market, with its highly profitable pickup truck and SUV segments, generates the overwhelming majority of Ford’s profits.
Ford’s U.S. sales chief Mark LaNeve said on April 2 that Ford believes some level of government stimulus will be needed for American consumers once the COVID-19 pandemic recedes.
Ford said it expects its first-quarter adjusted loss before interest and taxes to be about $600 million, compared with a profit of $2.4 billion a year ago.
The company said it expects to report revenue of about $34 billion for the quarter.
In morning trade, Ford shares were down 30 cents, or 5.6%, at $5.09.
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