Ford Nixes Dividend, Suspends Guidance -- 2nd Update
19 Marzo 2020 - 11:38AM
Noticias Dow Jones
By Mike Colias and Matt Grossman
Ford Motor Co. said Thursday it would shore up its balance sheet
by drawing on credit lines and suspending dividend payments, a
signal of the looming financial damage facing global auto makers as
the Covid-19 pandemic continues to depress sales and shut down
manufacturing lines.
The company also withdrew its guidance for 2020 issued in early
February, citing economic uncertainty, and plans to provide a new
outlook next month. Ford had forecast adjusted earnings per share
of 94 cents to $1.20.
The automobile giant told its lenders it would draw down the
entirety of two lines of credit -- $13.4 billion from a corporate
credit facility and $2 billion from a supplemental facility -- to
boost its cash position as it temporarily shuts down plants in
North America.
Ford also suspended its dividend for the first time since before
the financial crisis, a move aimed at improving financial
flexibility in the short term, it said. The dividend suspension
could save the company roughly $2.4 billion annually.
The economic fallout from the widening pandemic has prompted
auto analysts to scrutinize auto makers' balance sheets to assess
companies' preparedness for a severe drop in production.
Ford, the U.S.'s second largest car maker by sales, was already
wrestling with falling sales, troubles overseas and a slumping
stock price before the health crisis hit.
Chief Executive Jim Hackett had been fending off questions from
investors about the pace of his plan to reverse a yearslong profit
decline. Ford has missed Wall Street earnings forecasts in three of
the past five quarters, battering shares even before the recent
coronavirus-driven selloff. Some analysts in recent days have
questioned whether Ford would cut its dividend to preserve
cash.
Making cars is a capital-intensive, low-margin business; auto
makers typically carry global operating margins of less than 10%,
leaving car companies vulnerable to sharp economic downturns.
"While we obviously didn't foresee the coronavirus pandemic, we
have maintained a strong balance sheet and ample liquidity so that
we could weather economic uncertainty and continue to invest in our
future," Mr. Hackett said in a statement.
Ford last suspended its dividend in 2007, ahead of the last
financial crisis, during which it narrowly avoided bankruptcy. It
restored its dividend in 2012.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
March 19, 2020 13:23 ET (17:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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