Ford Nixes Dividend, Suspends Guidance
19 Março 2020 - 11:43AM
Dow Jones News
By Matt Grossman and Mike Colias
Ford Motor Co. said Thursday it would shore up its balance sheet
by drawing on credit lines and suspending dividends as the Covid-19
pandemic roils the economy.
The company also withdrew its guidance for 2020 issued in early
February, citing economic uncertainty. Ford had guided for adjusted
earnings per share of 94 cents to $1.20.
The automobile giant told its lenders that it will draw down the
entirety of two lines of credit, including $13.4 billion from a
corporate credit facility and $2 billion from a supplemental
facility. Ford also suspended its dividend, a move aimed to improve
financial flexibility in the short term, it said.
The dividend suspension could save the company roughly $2.4
billion annually.
"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," Jim Hackett, Ford's chief executive, said in a
statement.
Ford also unveiled a plan to relieve customers of payments on
some new cars. For buyers of 2019 and 2020 model-year vehicles, the
company said it will cancel three months' worth of payments and
would defer three additional months.
Ford last suspended its dividend in 2007, ahead of the financial
crisis, during which it narrowly avoided bankruptcy. It restored
its dividend in 2012.
Ford's decision to temporarily close all its factories in North
America through at least March 30 will have an immediate impact on
its cash flow and bottom line, because car makers book revenue as
soon as they ship vehicles from the plant to the dealership.
The company relies on the North America market and its in-house
lending arm for virtually all of its global profit, having swung to
losses overseas. A protracted shutdown of its plants in the U.S.,
Canada and Mexico would have a severe impact on its cash flow and
operating profit, analysts say. The company also has suspended some
production in Europe.
The company is in the midst of an $11 billion, multiyear
restructuring that has crimped its cash flow, which already had
been dwindling in recent years. Company executives have said the
dividend is being funded from cash on the balance sheet, rather
than cash flow, but had planned to continue paying it.
"We like to return value to shareholders," Mr. Hackett said
during a conference call with analysts in February. "The dividend's
been a legendary value creator at Ford...I want to continue
that."
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
March 19, 2020 10:28 ET (14:28 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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