Ford posts profit, but expects full-year 2020 loss
Ford Motor Co on Thursday said it expects a full-year loss but added it should have ample cash on hand throughout the rest of 2020, even if global demand falls further or the Covid-19 pandemic forces more shutdowns of vehicle assembly plants.
The No 2 US car maker also said that on July 27 it repaid $7.7 billion (roughly R128,924,565,000) of an outstanding $15.4bn (roughly R257,865,300,000) on its revolving credit facilities, and extended $4.8bn (roughly R80,373,600,000) of its three-year revolving credit lines.
Ford's comments came as the company posted a quarterly profit thanks to an investment by Volkswagen AG in its self-driving Argo AI unit, more than offsetting a loss caused by a coronavirus-induced production shutdown.
The better-than-expected results and earnings outlook sent Ford's shares up 4% in aftermarket trading.
“It's a good quarter for Ford in light of the circumstances,” CFO Tim Stone told reporters on a conference call.
German automaker VW closed its $2.6bn (roughly R43,535,700,000) investment in Argo last month.
Ford said it expects a pretax profit of between $500m (roughly R8,377,935,000) and $1.5bn (roughly R25,133,805,000) for the third quarter and a loss for the fourth quarter, which features three significant product launches delayed by the shutdown earlier this year.
In April, Ford warned that its second quarter loss would more than double to more than $5bn (roughly R83,779,350,000) due to the coronavirus outbreak.
Stone said a focus on cost-cutting, a productive restart after a two-month production shutdown, strong performance by the automaker's captive finance arm and a solid pricing environment for its vehicles had helped mitigate the anticipated loss.
The automaker said it ended the quarter with nearly $40bn in cash (roughly R670,234,800,000), and should be able to maintain or exceed its target cash balance of $20bn (roughly R335,120,800,000) for the rest of 2020, even if global auto demand falls or if Covid-19 forces another big wave of plant closures.
Ford reported net income in the second quarter of $1.1bn (roughly R18,431,644,000), or 28 cents a share (roughly R4,19), compared with a profit of $100m (roughly R1,676,375,000), or 4 cents a share (roughly R0,67) a year earlier.
Excluding items, Ford posted a second-quarter operating loss of $1.9 billion (roughly R31,851,125,000), or 35 cents a share (roughly R5,87).
Analysts had expected a loss for the quarter of $1.17 per share (roughly R19,61).