Ford Reports Big Loss But It Expected Worse -- WSJ
July 31 2020 - 3:02AM
Dow Jones News
By Mike Colias and Ruth Bender
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 31, 2020).
Ford Motor Co. posted a $1.9 billion operating loss in the
second quarter, the latest global auto maker to report steep losses
from factory closures as the pandemic's financial fallout on the
car business comes into focus.
Still, global auto makers this week said they expect profits to
return in coming months -- barring further factory disruptions
related to Covid-19 -- as the restart of production has mostly gone
smoothly and buyer demand has been stronger than analysts expected
when the crisis hit.
Ford's second-quarter result was far better than the $5 billion
operating loss the company signaled in April, when its U.S.
factories were idled amid Covid-19 lockdowns. Ford's loss of 35
cents per share on a pretax basis, adjusted for one-time items,
beat the average analyst forecast of a $1.17 loss.
The auto maker lost money in each major region in which it
operates, including the normally lucrative North American market,
where it lost nearly $1 billion in the April-to-June period.
Resilient sales of expensive Ford F-150 pickup trucks helped offset
several weeks of lost production in April and May, the company
said.
The company posted net income of $1.1 billion for the quarter,
after factoring in a $3.5 billion gain related to Volkswagen AG's
June investment in the company's driverless-car startup Argo
AI.
The coronavirus has plunged car makers around the world into one
of the deepest crises in recent years and added to struggles the
industry was already facing before the pandemic, with softening
demand for cars and soaring costs for technology.
Ford's second-quarter operating result was worse than that of
rival General Motors Co., which posted a $536 million pretax loss
and breezed past Wall Street's forecasts.
The gap with GM was partly explained by the geographic footprint
of the two companies: GM's largest market is China, which recovered
from Covid-19 shutdowns in the quarter. Ford has a much smaller
presence in China and, unlike GM, produces cars in Europe, which
was hit by pandemic disruptions during the period.
Ford expects third-quarter operating profit to rebound to
between $500 million and $1.5 billion. GM on Wednesday said it
expects pretax earnings of more than $2 billion in each of the next
two quarters.
Volkswagen slashed its proposed dividend Thursday after swinging
to a net loss in the second quarter, but the world's biggest car
maker by sales also said there were signs a recovery was under way
in markets from Western Europe to the U.S.
Volkswagen, which also makes the Audi and Porsche brands, posted
a net loss of EUR1.61 billion ($1.9 billion) in the second quarter
ended June 30, compared with a net profit of EUR3.96 billion in the
same period a year earlier. Revenue fell 37% to EUR41.08 billion
from EUR65.19 billion as sales slipped across the world because of
economic shutdowns aimed at containing the pandemic.
"The first half of 2020 was one of the most challenging in the
history of our company due to the Covid-19 pandemic," said Chief
Finance Officer Frank Witter.
Renault SA on Thursday posted a net loss of EUR7.29 billion for
the first half of the year as the French auto giant reeled from the
effects of the pandemic as well as the woes of its alliance partner
Nissan Motor Co.
The plunge was more than twice the loss Renault posted for all
of 2009 during the financial crisis. It also outstripped analysts'
forecast of a EUR4.49 billion loss. Shares fell more than 5% in
early trading in Paris.
Volkswagen said that because of the heft of the impact from the
pandemic and difficulty in predicting the future, the company will
propose to shareholders to lower its dividend for 2019 to EUR4.8
per ordinary share from a previous proposal of EUR6.5 per ordinary
share, and EUR4.86 per preferred share instead of EUR6.56.
The German auto maker sounded a more optimistic note for the
second half of the year.
Through May, sales mainly in post-lockdown China had been
showing signs of recovery, while in the U.S. and Europe they
continued to decline sharply. But Volkswagen said a recovery in
demand for cars in markets from Western Europe to the U.S. helped
the group improve car deliveries to customers in June and July,
even though they remained in the red.
Daimler AG last week said it was registering signs of recovering
demand for luxury cars and electric vehicles, with China leading
the way, prompting shares to rise. The pandemic, however, also
prompted Daimler to expand cost cutting.
Nick Kostov in Paris contributed to this article
Write to Mike Colias at Mike.Colias@wsj.com and Ruth Bender at
Ruth.Bender@wsj.com
(END) Dow Jones Newswires
July 31, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Renault (EU:RNO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Renault (EU:RNO)
Historical Stock Chart
From Sep 2023 to Sep 2024