Ford Motor Co. said today it’s suspending its stock dividend and tapping credits lines to ensure it has enough cash amid the outbreak of the coronavirus (COVID-19).
The Dearborn, Mich.-based automaker also withdrew a previous 2020 earnings forecast.
“Ford is managing through the coronavirus crisis in a way that safeguards our business,” CEO Jim Hackett said in a statement. “We plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”
Suspending the dividend will help the automaker conserve cash. Ford had been paying a quarterly dividend of 15 cents a share for its common and Class B shares. Ford posted cash payments for dividends of $2.39 billion in 2019. Class B is a super-voting class that gives the Ford family 40 percent voting control.
Ford last suspended its dividend from September 2006 until March 2012, according to Dividend.com. During that period, the company cut jobs and operations. It also endured a major recession that saw rival automakers General Motors and Chrysler be revamped in 2009 under U.S.-backed bailouts.
The automaker also announced it will borrow unused amounts against two credit lines: $13.4 billion under its corporate credit facility and $2 billion from its supplemental credit facility.
The borrowed cash will be used “to offset the temporary working capital impacts” of coronavirus-related production shutdowns, Ford said. The company this week said week it was temporarily shutting down operations in North America and Europe because of the COVID-19 outbreak.
“While we obviously didn’t foresee the coronavirus pandemic, we have maintained a strong balance sheet and ample liquidity so that we could weather economic uncertainty,” Hackett said in the statement.
Ford said it had $22 billion in cash and $35 billion in liquidity at the end of 2019, above its targets of $20 billion and $30 billion respectively.
The automaker in February said it expected 2020 adjusted earnings before interest and taxes of $5.6 billion to $6.6 billion. That forecast is now off the table. Ford said it will provide an update when it reports first-quarter financial results in late April.