Ford Motor Co. (F) - Get Ford Motor Company Report shares were indicated lower in pre-market trading Thursday after the carmaker said it would take a $650 million charge following a move to close a key production facility in the United Kingdom.
Ford said its 1.5-litre petrol engine plant in Bridgend, Wales, would shutdown in February of next year, a move that would likely mean the loss of around 1,500 jobs and cost the company $400 million in separation and termination payments. A further $250 million in non-cash charges, mostly linked to pension expenses.
"Creating a strong and sustainable Ford business in Europe requires us to make some difficult decisions, including the need to scale our global engine manufacturing footprint to best serve our future vehicle portfolio," said Ford Europe president Stuart Rowley. "We are committed to the U.K.; however, changing customer demand and cost disadvantages, plus an absence of additional engine models for Bridgend going forward make the plant economically unsustainable in the years ahead."
Ford shares were marked 0.7% lower in pre-market trading following the closure announcement, indicating an opening bell price of $9.71 each, a move that would still leave the stock with a 27% year-to-date gain.
Last month, Ford boss Jim Hackett said the automaker is entering the final phase of its plan to shed 7,000 salaried positions globally, about 10% of its workforce, as it looks to save $600 million a year.
"Ford is a family company and saying goodbye to colleagues is difficult and emotional," Hackett said in a company-wide email. "We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead giving people the choice to stay for a few days to wrap up and say goodbye."
Ford's first quarter earnings, however, surprised to the upside thanks to a to a surge in U.S. demand for its iconic pick-up trucks that offset weakening international sales.
Ford said earnings for the three months ending in March rose nearly 52% from the same period last year to a forecast-beating 44 cents a share. That's even as total revenues edged 3.9% lower to $40.34 billion as key markets in China continue to weaken.
U.S. sales, however, held steady at $25.4 billion, with healthy demand for trucks and SUVs in the company's home market providing $2.2 billion of its overall $2.4 billion in operating earnings for the quarter
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