Ford Motor (F) - Get Report suspended its dividend, withdrew its financial guidance to investors and analysts and offered payment relief to some new-car buyers, all in an effort to contend with the effects of the coronavirus pandemic.
The Dearborn, Mich., company also took steps to bolster its cash position, saying it would borrow the unused amounts against two lines of credit: $13.4 billion under its corporate credit facility and $2 billion under its supplemental credit facility.
It will use the borrowings “to offset the temporary working-capital impacts of the coronavirus-related production shut owns and to preserve Ford’s financial flexibility,” the company said in a statement.
Ford said it has targeted $20 billion of cash and $30 billion in overall liquidity heading into an economic downturn. "At the end of 2019, those levels were $22 billion and $35 billion, respectively," the company said in its Thursday statement.
“Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” Chief Executive Jim Hackett said.
Ford earlier this week said that beginning today it would suspend production at its plants in North America and Europe "to protect the health and safety of employees and respond to issues with the supply chain and other constraints."
At last check Ford shares were trading off 4.1% at $4.32.
On Feb. 4, when it reported results for the 2019 fourth quarter and full year, Ford estimated that for 2020 it would post adjusted earnings of 94 cents to $1.20 a share. Wall Street analysts had been estimating profit of $1.31 a share.
It pegged capital spending at $6.8 billion to $7.3 billion, down as much as $800 million from 2019.
And Ford said it had expected to pay out 15 cents a share as a quarterly dividend, subject to the board’s approval.
The company's Feb. 4 guidance excluded the effects of the coronavirus pandemic.
The company said it would update investors and analysts when it reports first-quarter results. That's currently set for April 28.
Separately, Ford said, it and its U.S. dealers "are offering customers who are dealing with their own peripheral challenges from the coronavirus a variety of services, including six months of payment relief for new-car buyers."
For eligible new-car customers who finance their purchases through Ford Credit, Ford said it would pay for three months and customers can defer for up to three more.
"The program is for people purchasing 2019 and 2020 model-year vehicles, excluding 2020 Super Duty trucks," the company said.