Ford Rout Worsens on Forecast for $5 Billion Quarterly Loss

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Ford Motor Co.’s sagging stock fell further after the automaker forecast a more than $5 billion second-quarter operating loss due to the coronavirus pandemic’s blow to the global car industry.

Volumes will decline significantly in every region during the three months ending in June, and the economic environment is too unclear to give full-year guidance, the second-largest U.S. automakersaid Tuesday. Ford shares fell as much as 7.4% in late trading after closing down 42% year-to-date.

The economic crisis caused by the pandemic is devastating Ford’s efforts to recover from three consecutive annualearnings declines. Chief Executive Officer Jim Hackett’s execution of an$11 billion global reorganization was undermined last year by thebotched launch of the Explorer sport-utility vehicle. Before the coronavirus hit, Hackett wascounting on a raft of new models to start reversing the company’s fortunes.

“We must not only weather this crisis; we need to emerge from it ready to build a brighter future,” the CEO said on a call with analysts.

22,412 in U.S.Most new cases today

-16% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​12 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

-0.​5% Global GDP Tracker (annualized), March

After borrowingmore than $15 billion from existing lines of credit in March and issuing$8 billion in junk bonds this month, Ford had a cash balance of $35 billion as of April 24. It’s been “pulling every available lever” to boost liquidity, Hackett said.

“We’re well positioned to not only invest in our customer initiatives, our products, our technology initiatives, but also to navigate through these circumstances, even if production doesn’t resume, which we think it will,” Chief Financial Officer Tim Stone told reporters. “We have a firm grasp on the circumstances and we’re running our business appropriately.”

Revenue Miss

Automotive revenue slid 15% to $31.34 billion in the first quarter, $31.3B, EST. $32.53B" class="terminal-news-story" target="_blank">lower than analysts’ average estimate.

Ford’s adjusted loss before interest and taxes was $632 million, and the carmaker estimates the total was dragged down by at least $2 billion from the negative effects of the virus.

The carmaker’s factories in North America -- its only consistently profitable region -- were closed for about two weeks in the first quarter andremain shuttered with no set date for reopening.

“This took a situation that was already difficult and makes it even more existential,” Adam Jonas, a Morgan Stanley analyst with the equivalent of a buy rating on Ford, said in apodcast interview with Automotive News this month.

Launches in Limbo

Key launches now in limbo include the revivedBronco SUV, the redesignedF-150 pickup and the electricMustang Mach-E. Ford hasn’t provided details on when those crucial new models -- all scheduled to go into production this year -- will actually arrive in showrooms.

“The only good news in the short term would be announcing when they can get back to work and start recording revenue,” said David Whiston, a Morningstar analyst who rates Ford the equivalent of a buy.

Ford is “getting the F-150 and the Bronco going,” and the Mustang Mach-E hopefully will show the company “can be a player in electric vehicles,” Whiston said.

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