Ford Shares Tumble as Carmaker Forecasts $5 Billion Q2 Loss, Pulls 2020 Profit Guidance

Ford CFO Tim Stone said the carmaker's $35 billion cash pile is sufficient to take us through at year end" after tapping credit markets earlier this month. .
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Ford Motor Co.  (F) - Get Report shares traded lower Wednesday after the carmaker forecast a deeper-than-expected current quarter loss of more than $5 billion but declined to provide a full-year profit outlook amid the coronavirus pandemic.

Ford said it burned through $2.2 billion in cash over the first quarter, while posting a wider-than-expected adjusted loss of 23 cents a share on sales of $34.32 billion, but insisted it had enough cash to last through the year after tapping credit markets earlier this month. 

Ford said it had $35 billion in cash on its balance sheet as of April 24, thanks in part to $15.4 billion gained from drawing down on two existing credit lines, and is looking to "a gradual ramp up over the next few months" of its manufacturing plants and supply network "before full production is resumed globally."

"In mid-March, we went through our financial guidance for 2020. As a reminder, when we gave you our outlook in early February, we said it excluded impacts of COVID-19," CFO Tim Stone told investors on a conference call late Tuesday. "Today, unfortunately, the economic environment remains too uncertain to provide updated guidance for the year."

"However, assuming in the second quarter, we restart production in a phased way." he added. "We believe we will see the largest impact from this crisis in the second quarter as industry volumes continue to be down significantly in every region year-over-year."

Ford shares were marked 1% lower in early trading Wednesday to change hands at $5.32 each, a move that would extend the stock's year-to-date decline to around 42%.

"For all the fears of how OEMs would handle the worst of the coronavirus upheaval, we’d argue the silver lining of Ford’s 1Q print is that commentary on cash burn + 2Q guide were not worse than feared, and were in-line with bearish expectations," said Credit Suisse analyst Dan Levy. 

"It is increasingly clear Ford has ample liquidity to manage through the worst. Yet our key concern lies in Ford’s ability to balance the ‘Two Clocks’ (near term pressures from the business cycle and longer-term secular shifts in the industry) amid a heavier debt load," he added.