Engine assembly line for Ford KA 1.0 3-cylinder at Ford Engines in Camaçari, Brazil.
Paulo Fridman | Corbis News | Getty Images
Ford Motor ceases production of vehicles in Brazil as part of a restructuring of its South American operations. The actions, including the closure of three factories, should lead to $ 4.1 billion in pretax taxes, Ford said Monday.
The automaker said it will record about $ 2.5 billion in cash expenditures, mainly in 2021, for employee separation, termination, settlement and other payments. In addition, it will record about $ 1.6 billion in non-cash depreciation for tax receivables and accelerated depreciation.
Ford has been operating in Brazil for more than a century, however, the region and operations have been unstable in recent years.
Ford is actively evaluating and restructuring its global operations, including those in South America, while trying to execute a $ 11 billion repayment plan. Ford hopes to increase profitability by achieving an adjusted EBIT margin of 8% and generate a constantly adjusted free cash flow.
Production will stop immediately at its Camacari and Taubate factories in Brazil, however, parts production will continue for several months to support after-sales inventories, Ford said. Another plant in Horizonte, Brazil, will continue to operate until the fourth quarter. About 5,000 employees are expected to be affected.
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