Ford plans $350 million charge on drop in Venezuelan currency
DETROIT (Bloomberg) -- Ford Motor Co., which warned in December about volatility in its Venezuelan operations, will take a charge of about $350 million in the first quarter for a change in how it values the South American nation's currency.
Ford is now using an exchange rate of 10.8 bolivars to the U.S. dollar, compared with the 6.3 rate it used previously, the company said Tuesday in a filing with the U.S. Securities and Exchange Commission.
The automaker said in January it was cutting production in Venezuela because the country faced a shortage of hard currency. Ford said it reduced output there by 75 percent in the fourth quarter and planned to keep it at that lower rate this year as Venezuelan car sales plunge.
The availability of U.S. dollars "is crimping our ability to pay suppliers," Mark Fields, Ford's COO, said in January. "We've taken our production down."
Ford's currency move follows a warning it gave in December that it was assuming a "major" devaluation in the bolivar.
"Recent government actions in Venezuela, including price controls and a very limited and uneven supply of foreign currency to support production, have affected production adversely as well as the business and overall results in the region," Bob Shanks, Ford's CFO, said in December. "The environment in Venezuela is volatile and increasingly difficult and unpredictable for business."Contact Automotive News