Ford Motor stated on Monday it expects to post a pre-tax loss of about $600 million for the first quarter as the coronavirus crisis have led a reduction in its sales and shuttered auto assembly plants, resulting in a 21% decline in vehicle sales to dealers against the same quarter in 2019.
Only Ford’s joint ventures in China are currently producing vehicles. The automaker stated it is working on a scenario for a phased resumption of its manufacturing plants starting in the second quarter.
“However, we believe we have enough cash today to get us through at least the end of the third quarter without incremental vehicle production and wholesales or financing actions,” CFO Tim Stone stated.
Asked whether the automaker would apply for loans from the U.S. government or the Federal Reserve to preserve its operations for longer if needed, a spokesman said that unlike during the Great Recession – when financing dried up – there is still enough liquidity in the capital markets.
“We have a broad range of options” for getting additional financing if required, the spokesman stated.
As of April 9, Ford stated it had about $30 billion in cash on its balance sheet, consisting of $15.4 billion it borrowed last month against two present credit lines.
Ford stated any decisions on resuming its plants will be made in cooperation with local unions, providers, dealers and other stakeholders.
In March, the company closed plants in North America and Europe because of the rise of pandemic.
Previously this month, Ford said its first-quarter U.S. sales had dropped 12.5% during the quarter. The U.S. market, with its highly profitable pickup truck and SUV segments, brings the overwhelming majority of Ford’s profits.
Ford’s U.S. sales chief Mark LaNeve stated on April 2 that the automaker believes some level of government stimulus will be required for American consumers once the COVID-19 pandemic is brought under control.
Ford stated it expects its first-quarter adjusted loss before interest and taxes to be at $600 million, compared with a profit of $2.4 billion one year ago.
The automaker said it expects to report revenue of around $34 billion for the quarter.