Summary
Ford Motor Company announced on February 15, 2019, through its Brazilian subsidiary, Ford Brazil, its plan to exit the commercial heavy truck business in South America. This strategic move involves ceasing production at the São Bernardo do Campo plant in Brazil during 2019, which will end sales of the Cargo heavy truck lineup and Fiesta cars in the region. This decision is a significant operational shift for Ford in South America, impacting its product portfolio and manufacturing footprint. In connection with this exit, Ford anticipates recording approximately $460 million in pre-tax special item charges. A portion of these charges, about $100 million, will be non-cash, related to accelerated depreciation and amortization. The remaining $360 million will be paid in cash, primarily covering separation and termination costs for employees, dealers, and suppliers. The majority of these charges and cash outflows are expected to be recognized within the 2019 fiscal year, impacting the company's short-term financial results.
Key Highlights
- 1Ford Brazil is exiting the commercial heavy truck business in South America.
- 2Production at the São Bernardo do Campo plant in Brazil will cease in 2019.
- 3Sales of Cargo heavy trucks and Fiesta cars in South America will end.
- 4Ford expects to record approximately $460 million in pre-tax special item charges.
- 5Approximately $100 million of the charges are non-cash (accelerated depreciation/amortization).
- 6Around $360 million of the charges will be cash outflows for separation/termination costs.
- 7Most charges and cash outflows will be recognized in 2019.