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Ford Motor Co. on Monday warned about lower sales in the first quarter as the coronavirus pandemic snuffs out demand for autos, with investors bracing for possible, similar announcements from General Motors Co. and Tesla Inc.
Ford F, -4.84% shares traded as low as $5.10 on Monday, set to snap a four-day winning streak and on pace for their largest percent decrease since April 1. The stock is down 46% in the past 12 months, compared with losses around 6% for the S&P 500 index. SPX, -1.74%
Ford said it expects to report revenue of about $34 billion and a first-quarter adjusted loss around $600 million as the coronavirus pandemic continues to cause economic destruction.
That would compare with sales of $40 billion in the first quarter of 2019 and analyst expectations for $37 billion in sales for the January-through-March quarter.
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Ford reports first-quarter results April 28.
The preannounced first-quarter results “were not as bad as most had feared,” but concerns remain regarding Ford’s second and third quarters and its cash burn rate, CFRA analyst Garrett Nelson said.
For Ford, the duration of the COVID recession is key to determining if there is equity value call option for a 2021/2020 recovery as Ford’s balance sheet, its global cash restructuring programs, and the F-150 pick up truck launch later this year are “all likely to have been semi-permanently impaired,” analysts at Evercore ISI said in a note Monday.
Meanwhile, auto makers such as GM GM, -4.36%, Tesla TSLA, +12.17% and others “are being encouraged to be more forthcoming with financial information given the fluidity of the situation, so we are likely to see more auto industry preannouncements ahead of earnings,” CFRA’s Nelson said.
Spending on big-ticket discretionary items such as pickup trucks is likely to remain weak for some time and “we wouldn’t rule out the possibility of an auto industry bailout,” he said.
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Ford said it was considering “possible additional financing actions” while the pandemic stalls commerce around the world. The company last month halted its dividend and share buyback program, withdrew its 2020 guidance, among other measures to face the crisis.
There’s enough cash on its balance sheet currently “to get us through at least the end of the third quarter with no incremental vehicle production and wholesales or financing actions,” Chief Financial Officer Tim Stone said in Monday’s statement.
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“We continue to opportunistically assess all funding options to further strengthen our balance sheet and increase liquidity to optimize our financial flexibility,” Stone said. “We also are identifying additional operating actions to enhance our cash position.”
Ford said it had about $30 billion in cash on its balance sheet as of April 9, including $15.4 billion from revolver borrowings in March.
