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Ford to delay new product launches

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Via Financial Times

Ford chief executive Jim Hackett told investors on Tuesday the coronavirus pandemic will “slide the timing” of critical product launches scheduled for this year and next.

The carmaker had planned to launch a redesigned version of its bestselling F-150 pick-up truck in 2020, as well as the all-electric Mustang Mach-E and a small off-road utility vehicle. Next year it plans to unveil a new Ford Bronco, which will compete with Jeep.

But the shutdown of Ford’s plants because of the virus has delayed the launches from the original timetable.

“We will be able to update you on launch timing once we have a better understanding of our operational readiness as we bring our manufacturing back up,” said Tim Stone, chief financial officer.

Ford expected an adjusted $5bn loss before interest and taxes in the second quarter as fewer vehicles were sold globally, Mr Stone said.

The company lost an adjusted $632m before interest and taxes in the first quarter, which Ford said included a $2bn “negative effect” from the coronavirus pandemic that has halted production and caused consumer demand to evaporate.

By generally accepted accounting principles, Ford’s net loss for the first quarter was $2bn, compared with net income of $1.1bn for the same period a year earlier. Revenue declined nearly 16 per cent to $34bn.

“There’s no denying the negative economic consequences of a pandemic,” Mr Hackett said.

While Ford announced on Tuesday that it would reopen European factories on May 4, and other locations during the second quarter, the only plants producing and selling cars at present are its joint ventures in China, where the virus first took hold and where the economy is now reopening.

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The company has drawn $15.4bn from two credit lines and sold $8bn worth of bonds in recent weeks to deal with the disruption. The company will pay interest rates up to 9.6 per cent after losing its investment-grade credit rating in March. Ford posted an adjusted free cash outflow for the first quarter of $2.2bn.

Cash use has been of particular concern to investors as the company continued to pay suppliers after shutting down factories in March, but Ford said it expects the outflow to decline after early May.

“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,” Mr Stone said.

Credit Suisse analyst Dan Levy wrote in a note that while “Ford has ample liquidity to survive through the worst of the upheaval . . . our outlook remains muted given a heavier debt load and ability to manage (long-term) disruption to the industry”.

Ford began a global restructuring in 2018 that is scheduled to cost $11bn in lowered profits. Mr Stone said the restructuring is “on track”.

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