Ford‘s 2017 incomes will be hit by a postponed currency impact of at least $600 million from Britain’s decision to leave the European Union, the United States automaker informed Reuters, putting in 2016’s record European profits beyond reach.
The automaker will not gain from currency hedges that had been shielding it from the pound’s depression following the June 23 referendum, Ford of Europe boss Jim Farley stated on Friday.
“When Brexit occurred we were totally hedged for the very first quarter with the more powerful pre-Brexit exchange rate,” Farley stated. “As we go into the rest of the year, especially the 2nd half, we now face the complete effects of the weaker sterling.”
Ford is Britain’s greatest engine maker along with its top-ranked vehicle brand by sales, with a 12 percent market share. The UK federal government has stated it will activate the two-year process for leaving the EU by the end of March.
The pound struck a seven-year low versus the euro in October and stays nearly one-fifth below its worth at the end of 2015, when uncertainty over Brexit started to weigh.
Sterling’s downturn is the “only major headwind” Ford presently faces in Europe, Farley stated. “We believe it could be upwards of $600 million this year.”.
Farley was speaking a day after Ford released 2016 results that included a record $1.2 billion European profit, while repeating that this year’s global earnings would be lower.