Ford Motor Co announced on Friday it will remove its Venezuelan operations from its future financial reports as the second-largest US car manufacturer suffers from the countrys unstable currency.
Effective December 31, figures from the companys results from Venezuela will not be included in Fords financial reports, marking it as the first of the companys units that it left out.
However, the company will “record cash and recognize income” from the country, that has been overtaken by currency devaluation. Additionally, Ford said that the accounting adjustment will not affect its operations nor ownership in Venezuela.
The decision will trigger a one-time pre-tax charge of $800 million, which will reflect in a $700 million reduction of its net profit for the fourth quarter. However, full-year profit will not be affected and is still projected at $6 billion, Ford said.
This is the second time Ford has been hit by Venezuelas unstable currency taking the overall damage done to the companys performance to more than $1 billion in 2014.
Meanwhile, Venezuelan President Nicolas Maduro announced plans on Wednesday to form the countrys fifth parallel currency market, outlining attempts to increase US dollar supplies. Mr. Maduro said that private companies and individuals would be able to exchange their dollar funds through brokerages.
Venezuela has several different exchange rates, depending on the purpose of the exchange. The government imports essential goods at 6.3 bolivars for a dollar, while in other markets rates can fluctuate between 12 and 52 bolivars per dollar. One US dollar is traded for 184 bolivars on the black market, according to dolartoday.com.
With the recent plunge of oil prices, Venezuelas economy has been badly hurt as the country derives around 96% of its revenue from oil sales.
General Motors and Toyota have already scaled back production in the country due to the economic difficulties. Last week the Venezuela Automobile Chamber released data showing that car production fell 72% to 19 759 vehicles in 2014, while auto sales dropped 76%.
In May, Ford, Toyota and the Dutch truck-maker CNH Industrial temporary stopped output due to a shortage of dollars.
Industries across the board have suffered as foreign companies find it difficult to cope with the countrys prohibition to take dollars out of Venezuela.
Ford Motor Co fell 0.80% on Friday and closed at $14.91, marking a one-year increase of 9.25%. The company is valued at $57.38 billion.
According to the Financial Times, the 16 analysts offering 12-month price targets for Ford have a median target of $16.00, with a high estimate of $22.00 and a low estimate of $13.00. The median estimate represents a 7.31% increase from the last close price.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
