Summary
Ford Motor Company (F) announced a significant restructuring of its Russian joint venture, Ford Sollers, impacting its operations and financial outlook. The company plans to exit the passenger car segment in Russia, shifting its focus solely to commercial vehicles. This strategic shift will lead to the closure of three key manufacturing facilities: two vehicle assembly plants in Naberezhnye Chelny and St. Petersburg, and an engine plant in Elabuga. The joint venture structure will also change, with Sollers PJSC taking a controlling 51% interest, indicating a reduced role for Ford in the future Russian operations.
Key Highlights
- 1Ford is exiting the passenger car segment in Russia, focusing exclusively on commercial vehicles through its joint venture, Ford Sollers.
- 2Production will cease in 2019 at three key Ford Sollers plants: Naberezhnye Chelny and St. Petersburg vehicle assembly plants, and the Elabuga engine plant.
- 3Ford expects to record pre-tax special item charges totaling approximately $450 million to $500 million due to this restructuring.
- 4A significant portion of these charges, estimated at $250 million to $300 million, will be non-cash, including accelerated depreciation, amortization, inventory, and deconsolidation adjustments.
- 5The remaining $200 million in charges are expected to be paid in cash, primarily for employee and supplier separation and termination payments.
- 6Most of these charges and cash outflows are anticipated to be recognized in the 2019 fiscal year.
- 7Sollers PJSC will assume a 51% controlling interest in the Ford Sollers joint venture.