Ford Motor Co. said Friday it will take a one-time pretax charge of $800 million in its fourth-quarter financial results after Venezuelan regulations have stopped it from being able to exchange U.S. dollars for bolivars.
The Dearborn automaker said in an SEC filing it expects the charge will reduce its fourth-quarter net income by $700 million, but it won’t impact its 2014 pretax profit, which it estimates will reach $6 billion. Financial results will be released Thursday.
“These exchange regulations, combined with other recent Venezuelan regulations, have constrained parts availability and are now significantly limiting our Venezuelan operations’ ability to maintain normal production,” Ford said in the filing.
Ford said its cash balance in Venezuela — $500 million — will no longer be included in its automotive gross cash.
“Ford has operated in Venezuela for the last 53 years and our operations in Venezuela will continue for the foreseeable future,” the automaker said in the filing. “We continue to work proactively with the Venezuelan official agencies to ensure they understand our Venezuelan operations’ business needs and potential production opportunities.”
Late last year the automaker warned investors that trouble in South America, among other factors, would cause profits to fall in 2014. As a result, Ford cut its profit estimate from between $7 billion-$8 billion to $6 billion.
Citi Research, in an investment note Friday, called the move a “modest positive” for Ford.
“The switch to the cost method of accounting is essentially an accounting ‘divorce’ that deconsolidates Venezuela results and therefore eliminates the currency volatility that plagued Ford’s 2014 results,” Citi’s Itay Michaeli wrote in the report.
Ford stock Friday closed at $14.91.
Staff Writer Melissa Burden contributed.