Ford posts profit, but expects full-year 2020 loss
Automaker's CFO: 'It's a good quarter for Ford in light of the circumstances'
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 U.S. automaker also said that on July 27 it repaid $7.7 billion of an outstanding $15.4 billion on its revolving credit facilities, and extended $4.8 billion of its three-year revolving credit lines.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| F | FORD MOTOR CO. | 11.13 | +0.03 | +0.27% |
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 percent in after-market trading.
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"It's a good quarter for Ford in light of the circumstances," Chief Financial Officer Tim Stone told reporters on a conference call.
German automaker VW closed its $2.6 billion investment in Argo last month.
Ford said it expects a pre-tax profit of between $500 million and $1.5 billion for the third quarter and a loss for the fourth quarter, which features three significant product launches delayed by the shutdown earlier this year.
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In April, Ford warned that its second quarter loss would more than double to more than $5 billion due to the coronavirus outbreak.
Stone said a focus on cost-cutting, a productive restart following 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 $40 billion in cash, and should be able to maintain or exceed its target cash balance of $20 billion for the rest of 2020, even if global auto demand falls or if COVID-19 forces another big wave of plant closures.
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Ford reported net income in the second quarter of $1.1 billion, or 28 cents a share, compared with a profit of $100 million, or 4 cents a share, a year earlier.
Excluding items, Ford posted a second-quarter operating loss of $1.9 billion, or 35 cents a share.
Analysts had expected a loss for the quarter of $1.17 per share.