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Coronavirus Impact To Cause Loss Of $5 Billion In Current Quarter, Says Ford


04/29/2020


Coronavirus Impact To Cause Loss Of $5 Billion In Current Quarter, Says Ford
The impact of the coronavirus pandemic will result in a loss of more than $5 billion for the second quarter at Ford Motor Co, the company said, which will be double the loss of $2 billion that the company had incurred  in the first quarter of the current year. The company however said that the company has enough cash reserves for the company to tide over the rest of 2020 despite the ongoing crisis. 
 
"We believe the company's cash is sufficient to take us through the end of the year, even with no additional vehicle wholesales or financing actions," Chief Financial Officer Tim Stone said in a statement.
 
He however termed the current economic environment as being "too ambiguous" for the second largest auto company of the United States to predict an earnings outlook for the entire 2020.
 
Costs have been slashed by the company during the coronavirus pandemic to address the shutdown of its productions which included cutting of salaries of executives and white-collar employees.
 
Cost curtailment was also announced by the company for projects. The company said that it will be postponing the targets for its commercial autonomous vehicle services by a year to 2022 while also saying that it had taken a decision to not develop the luxury electric Lincoln sport-utility vehicle in partnership with electric vehicle maker Rivian, which the company had announced previously.
 
The current market value of the company now is at $20.6 billion which is less than the cash at hand that the company had as of April 24 at $35.1 billion which indicates that investors now expect the company to bur through cash significantly till a recovery in its business and the market as a whole is possible.
 
Earlier this month, the pandemic-fueled first-quarter loss had already been predicted by the company. The warning was issued on the very same day that the company had raised $8 billion from corporate debt investors.
 
By drawing down $15.4 billion from two credit lines and suspending its dividend last month, the company attempted to keep some cash safe on its balance sheet. The aim of the move was to increase its cash reserves to help tide over the pandemic related induced crisis. 
 
With the growth in the number of infections of the coronavirus, throughout the United States, virtually all automotive production in the country was brought to a halt in March. But now the focus of the US auto sector is on when it can restart operations and production with the US President Donald Trump now trying hard to reopen the economy and pushing Americans to get back to work while a number of states in the country are slowly reopening their economies.
 
Ford will restart production in te United States "as soon as practicable", Stone said in a conference call but did not offer any timeline.
 
(Source:www.firstpost.com)