World known automaker Ford Motors Co (F) has released its first quarter results for the year for the period ended March 31, from the results by the company, without a doubt current state of the global economy affected performance of the company in the quarter.
In the first quarter, the automaker reported losses amounting to $2 billion greatly attributing the loss to coronavirus pandemic which has caused a decline of vehicles demand in the entire world.
The company’s market value has dropped by almost $35 billion in less than a month. This development indicates that investors at U.S the second largest automaker expects the company’s stock to plunge deeper before things rebound.
Earlier in the month, Ford held a financing round whereby investors raised a total of $8 billion to help the company emerge from its corporate debts.
The automaker took various measures to survive these tough times, first Ford withdrew its dividend payment, then it drew down $15.4 billion from two credit lines to cushion for damages injected to the company by the pandemic.
The captive finance unit of Ford, posted earnings before tax of $30 million, a value way low than the $771 million posted by the unit a year ago in a similar quarter.
In the quarter Ford sales declined by 35% in China and 12.5% in the United States. The company was forced to cease production activities in China following breakout of the virus. Nonetheless, Ford says it has resumed production in China, in addition it’s looking forward to resume operation across Europe in the coming week.
Ford said the company may even perform worse in the second quarter compared to the first, Ford believes losses in current quarter (second quarter) may be anything around $5 billion, a value more than double losses in the first quarter.
The automaker declined to give financial guideline for the entire year claiming it would be too ambiguous for them to make any estimates considering the current pandemic situation.
The company was also quick to emphasize despite the turbulent times it has enough cash to see it through the entire year.
“We believe the company’s cash is sufficient to take us through the end of the year, even with no additional vehicle wholesales or financing actions,” said Ford’s CFO, Tim Stone.
