Summary
Ford Motor Company, through its subsidiary Ford Credit, announced a strategic exit from Brazil and Argentina. This involves ceasing the origination of new receivables by the end of 2021 and initiating the sale or wind-down of operations in these South American markets. This decision impacts affected employees and signals a shift in Ford's global operational footprint. Financially, Ford anticipates recording pre-tax charges of up to $375 million related to this exit. The majority of these charges, up to $365 million, are expected to be non-cash foreign currency translation losses recognized upon the disposition of its Brazilian and Argentinian subsidiaries. While the exact timing of the completion of these actions is pending, Ford expects a significant portion of these losses to be realized in 2021. Additionally, approximately $10 million in cash will be allocated for employee separation costs, primarily incurred in 2021.
Key Highlights
- 1Ford Credit subsidiaries in Brazil and Argentina will cease originating receivables by the end of 2021.
- 2Ford is initiating the sale or winding down of its operations in Brazil and Argentina.
- 3Up to $375 million in pre-tax charges are expected due to these exit activities.
- 4Approximately $365 million of the charges are anticipated to be non-cash foreign currency translation losses.
- 5Cash costs for employee separations are estimated to be around $10 million.
- 6The majority of the financial impact, including losses, is expected to be recognized in 2021.