Summary
Ford Motor Company (F) has filed an 8-K report detailing a significant impairment charge related to its automotive operations in India. The company estimates a material impairment charge of $800 million to $900 million due to held-for-sale impairment testing connected to the pending sale of these assets to a new joint venture with Mahindra & Mahindra Limited. Importantly, this charge is non-cash and will be recognized in the third quarter of 2019. Furthermore, Ford reiterated its expectation of approximately $11 billion in potential EBIT charges related to its 'Global Redesign' initiatives, with an estimated $7 billion in negative cash effects. The company indicated that most of these charges are expected to be classified as special items. Investors should monitor future quarterly results for additional details on these significant restructuring charges.
Key Highlights
- 1Ford will record a non-cash impairment charge of $800 million to $900 million in Q3 2019 related to its India automotive operations.
- 2The impairment is a result of held-for-sale testing in preparation for a joint venture with Mahindra & Mahindra in India.
- 3The joint venture with Mahindra & Mahindra is part of Ford's strategic realignment.
- 4Ford anticipates total 'Global Redesign' EBIT charges of about $11 billion.
- 5The 'Global Redesign' actions are expected to have negative cash effects of approximately $7 billion.
- 6Substantially all of the 'Global Redesign' EBIT charges are expected to be treated as special items, meaning they are unusual and infrequent.
- 7The company plans to provide further details on these charges when releasing its quarterly results.