By Claudia Assis, MarketWatch
Car maker draws more than $15 billion from credit lines, sees even bigger loss in the second quarter
Ford Motor Co. on Tuesday reported a wider-than-expected first-quarter loss and braced for steeper losses in the next quarter as the coronavirus pandemic continued to snuff demand for big-ticket items and kept factories closed.
"I never had a business plan that was called pandemic," Ford Chief Executive Jim Hackett said on a call after the results. "We just never imagined the economy turning off" like it has to curb the spread of the virus.
Ford (F) lost $2 billion, or 50 cents a share, in the quarter, versus a profit of $1.1 billion, or 29 cents a share, in the first quarter of 2019. Adjusted for one-time items, the car maker lost 23 cents a share, contrasting with an adjusted profit of 44 cents a year ago.
Sales fell 15% to $34.3 billion from $40.3 billion a year ago.
Analysts had expected Ford to report GAAP and adjusted losses of 8 cents a share on sales of $34.7 billion. Shares fell 6% in the extended session after ending the regular trading day up 4.1%.
"The first quarter was bleak, as expected. There will be few businesses that emerge unscathed from this crisis, but the good news is that Ford has more firm restart dates in Europe and in the U.S. so there's a little more certainty than there was a few days ago," Edmunds analyst Jessica Caldwell said.
The auto maker, which withdrew its 2020 guidance in March, said the current environment remains "too ambiguous" for an outlook. For the second quarter, however, the company is expecting an adjusted loss of more than $5 billion "as year-over-year industry volumes decline significantly in every region."
In the call with analysts, Ford executives said the company is bracing for the worst of the crisis hitting in the second quarter, even as it plans to go on with redesigns or re-launches of profitable pickup trucks and SUVs it had scheduled for 2020.
Ford said it recently borrowed more than $15 billion from existing lines of credit and has issued this month $8 billion in unsecured bonds to shore up its balance sheet.
At the end of the first quarter, Ford and Ford Credit had $35.1 billion and $28 billion, respectively, in liquidity, the company said.
In the call, Ford said it expects to resume some production in Europe and that there will be a "gradual ramp" up over the next few months before full production resumes worldwide in a "phased way."
Ford had warned of the impending decline in sales () as the coronavirus pandemic continues to ravage the U.S. economy.
Ford and other Detroit auto makers aim at reopening their plants in mid-May, () according to a report on Monday in the Wall Street Journal that cited people familiar with the issue. The companies are in talks with union leaders and Michigan authorities about the timeline to resume operations halted last month to combat the spread of COVID-19.
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Ford shares have lost about 48% in the past 12 months, which compares with losses around 2% and 9%, respectively, for the S&P 500 index and the Dow Jones Industrial Average .
-Claudia Assis; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
April 29, 2020 07:24 ET (11:24 GMT)
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