That’ll Buff Out: Ford Profits See $350M Dent From Currency Shift
As if making good on its warning back in December about potential volatility in its Venezuelan operations, Ford (NYSE:F) has announced that it is prepared to take a $350 million charge for the first quarter because of how it values Venezuela’s currency, Bloomberg is reporting.
Instead of the 6.3 bolivars per dollar it was using, Ford is now using an exchange rate of 10.8 bolivars per American dollar, according to a filing submitted by Ford on Wednesday with the U.S. Securities and Exchange Commission. The move follows an announcement in January that the company would be cutting production in the region, due to the currency hardships.
The availability of U.S. dollars “is crimping our ability to pay suppliers,” Mark Fields, Ford’s chief operating officer, said in Detroit earlier this year. “We’ve taken our production down.”
Ford also noted 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,” Ford’s Chief Financial Officer Bob Shanks said at the time, according to Bloomberg. “The environment in Venezuela is volatile and increasingly difficult and unpredictable for business.”