DETROIT (Bloomberg) -- Ford Motor Co. said it will take a one-time pretax charge of $800 million in its fourth quarter results because the inability to exchange U.S. dollars for Venezuelan bolivars has restricted operations in the South American country.
Ford’s $500 million cash balance in its Venezuelan operations will no longer be included in the company’s automotive gross cash, the company said today in a filing. The automaker said it will count cash and income from Venezuelan operations only when the parent company is paid for parts sold to the unit or it pays dividends to the parent.
The second-largest U.S. automaker said the charge will reduce its fourth quarter net income by about $700 million, but it doesn’t affect the full-year pretax profit forecast of about $6 billion.
Ford said in an April 1 filing that it was taking a $350 million charge to revalue the South American company’s currency. The company adjusted its exchange rate to 10.8 bolivars to the U.S. dollar, compared with the 6.3 rate it used previously.
Buckingham Research analyst Joseph Amaturo said in a note that Ford's announcement will be viewed negatively.
Venezuela President Nicolas Maduro on Wednesday shook up complex currency controls in the socialist-run country, where dollars are sold on the black market for about 180 bolivars to the U.S. dollar instead of the country's three-tiered exchange rate system that has ranged from 6.3 bolivars to about 50 bolivars to the dollar.
Auto sales industrywide in Venezuela fell 76 percent in 2014 to 23,707 vehicles, and the country's auto production fell 72.5 percent to 19,759 vehicles, a national automakers organization said last week.
Last January, when Ford reported a $8.57 billion pre-tax profit for 2013, the company warned that its operations in Venezuela could hurt 2014 profit.
Reuters contributed to this report.
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