The second-largest US automaker, Ford Motor recently announced that a charge that came from Venezuela related operations has negatively impacted the fourth-quarter net profit.
The country’s volatile currency has led to a $700 million cut of the estimated fourth-quarter net profit at Ford, with the company saying it has been battling the valuation of the Venezuelan Bolivar for more than a year as it fought to secure auto parts for its Venezuelan production operations and the accounting change became effective at the end of last year, on December 31. The rectification would lead to a one-time pre-tax special item charge of $800 million during the quarter, though Ford said it would not impact the full-year pre-tax profit forecast for last year – which currently stands at around $6 billion.
Ford’s announcement also comes after other companies – including rival General Motors – or Kimberly-Clark Corp, Clorox, Procter & Gamble, Baker Hughes and Brink’s have been negatively impacted by the Bolivar swings during the past 12 months or so. Starting with the first quarter of 2015, Ford has decided to have Venezuela as its only wholly owned division to not be included in the overall financial results – with the company saying it would “record cash and recognize income” as a standalone unit. The $800 million charge has been deemed an accounting modification and has nothing to do with any losses in Venezuela – they should be reported later on by the company as part of the company’s South American business.