Please ensure Javascript is enabled for purposes of website accessibility

Ford Cuts Dividend, Draws Down Credit Lines to Brace for Coronavirus Shutdowns

By John Rosevear - Mar 19, 2020 at 10:22AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ford will continue to fund product development.

Ford Motor Company (F -2.25%) suspended its dividend and borrowed billions of dollars from its existing credit lines, as it prepares to shut down most of its factories in North America and Europe. 

Ford said that it is borrowing $15.4 billion in total, the remaining amounts on two existing lines of credit. The company has also suspended payment of its $0.15-per-share quarterly dividend in order to conserve cash. 

Ford paid out about $2.4 billion in dividends in 2019.

A worker attaches parts to a partially-assembled Ford Explorer at Ford's Chicago Assembly Plant.

Ford is moving to conserve cash as it shuts down most of its factories in North America and Europe in response to the coronavirus. Image source: Ford Motor Company.

Ford said that the moves are intended to prioritize near-term flexibility and allow it to continue to invest in future-product development programs during a period of economic uncertainty, as the U.S. and Europe deal with the coronavirus pandemic. 

Right now, Ford is facing a sharp drop in revenue that could last for weeks. Ford said on Wednesday that it will shut down all of its manufacturing facilities in North America until at least March 30, to reduce inventories and to deep-clean the facilities in response to worker concerns about the COVID-19 virus.

A day earlier, Ford said that it will down several factories in Europe, for similar reasons. 

Ford isn't in danger of running out of cash immediately. Since emerging from the 2009 recession, Ford has sought to maintain a cash reserve of at least $20 billion and at least $10 billion more in available credit lines, funds intended to keep future-product development programs on track through a recession. 

Ford reports its cash on hand at the end of every quarter; as of its most recent report, Dec. 31, it had $22.3 billion in cash available and an additional $13.1 billion left on its credit lines.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
$11.06 (-2.25%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.