Ford will stop manufacturing in Brazil and expects charges of $ 4.1 billion
Assembly line for the engines for the Ford KA 1.0 3-cylinder in the Ford Engines plant in Camaçari, Brazil.
Paulo Fridman | Corbis News | Getty Images
Ford Motor ends vehicle production in Brazil as part of a restructuring of its South American operations. The measures, including the closure of three plants, are expected to result in input tax charges of $ 4.1 billion, Ford said Monday.
The automaker said it would primarily charge around $ 2.5 billion in cash fees in 2021 for employee separation, termination, billing, and other payments. In addition, non-cash tax write-offs and accelerated write-downs of approximately $ 1.6 billion will be recorded.
Ford has been doing business in Brazil for more than a century, but the region and operations have been unstable in recent years.
Ford is actively evaluating and restructuring its global operations, including those in South America, as it seeks to implement a $ 11 billion turnaround plan. Ford hopes to increase profitability with an adjusted EBIT margin of 8% and generate consistently strong adjusted free cash flow.
Production at the Camacari and Taubate plants in Brazil will cease immediately. However, some parts will continue to be manufactured for a few months to support aftermarket inventory, Ford said. Another facility in Horizonte, Brazil, will continue operating through the fourth quarter. It is expected that around 5,000 employees will be affected.
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