(Bloomberg) – Ford Motor Co.’s slump stock has declined further after the automaker predicted an operating loss of more than $ 5 billion in the second quarter due to the impact of the coronavirus pandemic on the global automotive industry.
The forecast deficit – which is about $ 2 billion lower than some analysts predicted – is based on Ford’s forecasts of large volume declines in each region. Ford stocks, which were already down 42% this year at the close, closed the trading session down 4.1%.
The economic crisis caused by the pandemic is devastating Ford’s efforts to recover from three consecutive annual profit declines. President and CEO Jim Hackett’s execution of a $ 11 billion global reorganization was undermined last year by the failed launch of the Explorer sport utility vehicle. Before the coronavirus struck, Hackett was counting on a series of new models to begin to reverse the fortune of the company.
“I have never had a business plan called a pandemic. We just couldn’t imagine the economy closing down, “Hackett told analysts. “It was really unique. “
Pulling on each lever
Ford postpones the launch of its initial one-year autonomous vehicle service to 2022, and its luxury division Lincoln has canceled plans to develop an electric model on a Rivian Automotive Inc. platform.
After borrowing more than $ 15 billion on existing lines of credit in March and issuing $ 8 billion in junk bonds this month, Ford had $ 35 billion in cash as of April 24. . .
“We are well placed to invest not only in our customer initiatives, our products, our technology initiatives, but also to navigate these circumstances, even if production does not resume, which we think will happen,” said Tim. Stone, chief financial officer. journalists. “We are well aware of the circumstances and we manage our business appropriately.”
Ford expects the worst of the impact of the coronavirus to be felt in the second quarter, said Stone. The company models the recovery in production in North America and Europe based on how it restarted operations in China, where the outbreak has started but is declining.
Miss to win
Auto revenues fell 15% from a year ago to $ 31.34 billion in the first quarter, which is lower than the average analyst estimates. The economic environment is too unclear to give indications for the whole year, the company said.
Ford’s adjusted loss before interest and taxes was $ 632 million, and the automaker estimates that the total has been reduced by at least $ 2 billion from the negative effects of the virus.
The automaker’s factories in North America – its only consistently profitable region – were closed for about two weeks in the first quarter. They remain closed without a fixed reopening date, although the company is tentatively targeting mid-May. Factories in Europe will restart from May 4.
“It took a situation that was already difficult and makes it even more existential,” said Adam Jonas, a Morgan Stanley analyst with the equivalent of a Ford purchase quote, in a podcast interview with Automotive News. this month.
Launches in Limbo
Ford says it will take longer to better understand how the pandemic will affect consumer behavior and attitudes toward autonomous driving and shared vehicles. The automaker joined forces with Volkswagen AG last year to work jointly on autonomous cars with robot driver developer Argo AI.
Other launches currently at risk include the Bronco SUV, the redesigned F-150 pickup and the electric Mustang Mach-E. Ford will provide details later when these crucial new models – all slated to go into production this year – actually hit showrooms.
“The only good news in the short term would be to announce when they can get back to work and start making income,” said David Whiston, a Morningstar analyst who rates Ford as a purchase.
Ford “starts the F-150 and the Bronco,” and the Mustang Mach-E will hopefully show that the company “can be a player in electric vehicles,” said Whiston.
(Updates with Lincoln canceling the electric model based on Rivian in the fifth paragraph. An earlier version of this story has been corrected to remove the reference to a carried over model)
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