Ford incurs $800 million in one-time pretax charge due to Venezuelan currency woes

Article by Christian A., on January 27, 2015

Ford Motor Co. will incur $800 million in one-time pretax charge in the fourth quarter of 2014 as the inability to exchange US dollars for Venezuelan bolivars has limited its operations in the South American country. According to a filing, it will not record the $500 million cash balance in its Venezuelan operations in its automotive gross cash, counting these cash and income only when Ford is paid for parts sold to the unit or it pays dividends to the parent.

According to Ford, the one-off will cut its net income in the quarter by around $700 million, although it doesn’t impact its around $6 billion in full-year pretax profit forecast. Joseph Amaturo, analyst of Buckingham Research, remarked in a note that Ford's announcement will be regarded negatively.

Venezuela President Nicolas Maduro recently restructured currency controls in his country, where dollars are sold for about 180 bolivars to the US dollar.

Prior to that, Venezuela has three-tiered exchange rate system in which the trading ranges from 6.3 bolivars to about 50 bolivars to the dollar. Ford posted $8.57 billion in pre-tax profit in 2013 and warned in January 2014 that it Venezuelan operations could hurt its results for the full year.

Ford said in an April 1, 2014, filing that it was taking a $350 million charge to revalue the Venezuelan bolivar, adjusted its exchange rate to 10.8 bolivars to the U.S. dollar, compared with the prior 6.3 rate.

If you liked the article, share on:

Topics: ford

Comments

Recommended

Earlier in November at the 2017 SEMA Show in Vegas is when Hennessey unwrapped the Venom F5 to all of us. But it was actually first introduced as a concept...
by - November 22, 2017
Mercedes-Benz just made an announcement that the 2018 E Class Cabriolet has finally landed in the United States. If you had not known, the E Class will be positioned in...
by - November 22, 2017
After a somewhat successful fray into the automotive market in China, the resurrected German automobile brand Borgward is finally heading to Europe, bringing along with it the Borgward BX7 sports...
by - November 22, 2017
Automotive industry veteran Bob Lutz has once again spoken out against Tesla. Known as one of Tesla Motors’ greatest skeptics, Lutz had stated two years ago that the Silicon Valley...
by - November 22, 2017
Dubai is one of the few countries where expensive cars are the norm, many of which are specially modified as well. And this just in: Bentley has debuted the new...
by - November 21, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries