Moody's downgrades Ford's credit quality to "scrap"

NEW YORK |

Moody's announced today that it lowered Ford's credit quality to "speculative" scrap due to the company's financial weakness while launching an ambitious restructuring.

The risk rating agency said that it lowered "Ba1" Ford's note after taking into account its weak prospects of cash flow and profit margins in the 2020/2021 period and also considered that the company's plans are "unprecedentedly large and challenging. "

Ford's performance eroded "in a period when global automotive market conditions have been quite healthy"said Moody's.

"Now Ford faces the challenges of solving those operational problems while demand in major markets is weakening and when the automobile industry competes with changes at an unprecedented rate related to the electrification of vehicles, autonomous driving, shared trips and increasing regulations against emissions of pollutant gases, said the rating agency.

The American car giant It faces operational inefficiencies in all key markets and weakened prospects in China.

Ford made progress in reducing its costs in the Asian giant. But the horizon looks challenging due to an "increasingly competitive market" and with declining economic growth rates in China.

The agency also doubts the ability to restructure operations in South America and Europe in the time that Ford imposed.

"The extent of that restructuring is huge and difficult. It will last at least until 2023," Moody's estimates.

Considerably better is the picture in North America, where the modernization of its lucrative series of trucks and pick-ups F should boost operational projects.

Moody's said Ford's alliance with Volkswagen is promising but will have a "minimal impact" on earnings and cash flow before 2022.

Following Moody's statement, Ford shares lost 2.9% in transactions following the closing of Wall Street.