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FCA, Ford Report COVID-19 Foiled Earnings, Deliveries

May 5, 2020
Ford and FCA reported more than $1.8 billion in net losses for the quarter, mainly due to negative effects from the coronavirus.

The automotive industry is taking the COVID-19 outbreak hard. Ford Motor Co. and Fiat Chrysler Automobiles N.V. both reported losses of more than $1.8 billion in net losses for the first quarter of 2020. Both companies attributed the negative results mainly to the coronavirus pandemic that has shuttered factories and snarled supply lines around the globe.

On May 5, Fiat-Chrysler reported that it had lost 1.7 billion euros, or $1.86 billion, over the quarter with an adjusted net loss of $547 million and an adjusted EBIT of about $109 million. The company reported quarterly revenue of about $22.5 million, but said suspended production had hammered demand and its ability to deliver products. Worldwide combined shipments were down 21%, the company reported.

In order to strength its liquidity, FCA says it will delay nonessential spending, reduce or defer salaries for almost all employees who receive one, and secured a $3.83 billion credit facility in April.

Mike Manley, FCA CEO, said on a call with investors that “the pandemic has had, and continues to have, a significant impact on our operations.” He signaled optimism, though, by predicting the company would “emerge well-positioned to grow and prosper on the other side.”

Ford reported its net loss of $2 billion in an earnings call April 28. The Dearborn, Michigan-based truck company also reported negative adjusted earnings of $632 million and said that the COVID-19 virus caused an estimated negative effect of “at least $2 billion.” Quarterly revenue was $34 billion. In order to maintain smooth operations, Ford says it has drawn $15 billion from existing credit lines, issued $8 billion in unsecured bonds, suspended its dividend and antidilutive share repurchasing program.

In a call to investors, Ford CEO Jim Hackett drew attention to the company’s production move to producing equipment needed for the COVID-19 response. “The imagination, initiative, and execution of our team is helping save lives today, and those qualities will allow Ford to emerge from this as a stronger company,” said Hackett. The company says it is “committed to producing hundreds of ambulances, millions of face shields, 50,000 ventilators, up to 100,000 respirators,” and more.

Both companies are looking ahead to reopening their factories soon. Ford says the company is planning a “phased restart of production” to begin next week in its European factories. Fiat-Chrysler reported they are “fully prepared to restart production as conditions allowed.” Both companies plan on implementing policies at restarting plants to protect employees from further infection.

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