$2.2 Billion Pretax Hit In Q4 Expected By Ford From Pension And Retirement Benefit Costs

Contributions that it has had to make towards its employee pension plans and retirement benefits will force United States based car maker Ford Motor to potentially take a pretax hit of about $2.2 billion for the fourth-quarter, the company has said.

The total amount that it would have to forgo for the fourth quarter includes a charge of $2 billion associated with pension plans outside the US and an additional $600 million linked to the company’s other post-retirement employee benefit plans applicable globally, the said in its filing with the Securities and Exchange Commission after the bell Wednesday.

Gains related to pension plans in the United States is expected to offset about $400 million of those losses, the company also mentioned in the filing. During the fourth quarter, the combine d impact of these losses and gains is expected to decrease the net income of Ford by about $1.7 billion when calculated on an after-tax basis.

Adjusted earnings per share of the company will not be affected because of the losses since the loss was a special item – the automaker assured its investors.

The share price of the company dropped by 1 per cent on Wednesday to close at $9.16 per share. And during Thursday’s premarket, there was not much movement in the share price of the company. Over the past one year, there has been an rise of 7.8 per cent in the share price of Ford but are currently down by 1.5 per cent so far for 2020.

Fourth-quarter and full-year earnings of the Dearborn-based are is expected to be reported after the bell on February 4.

In October, Ford lowered its 2019 earnings guidance to between $6.5 billion and $7 billion, or $1.20 to $1.32 per share. It previously said it would earn between $7 billion and $7.5 billion, or $1.20 to $1.35 per share.

(Adapted from CNBC.com)

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