Engine assembly line for Ford KA 1.0 3 cylinders at the Ford Engines plant in Camaçari / RS.
Paulo Fridman | Corbis News | Getty Images
Ford Motor is ending vehicle production in Brazil through a restructuring of its South American operations. The actions, including the closure of three factories, are expected to result in $ 4.1 billion in pre-tax charges, Ford said on Monday.
The automaker said it would register about $ 2.5 billion in cash charges, mainly in 2021, for employee separation, termination, liquidation and other payments. In addition, it will post about $ 1.6 billion in non-monetary write-offs for tax receivables and accelerated depreciation and amortization.
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 recovery plan. Ford expects to increase profitability by achieving an adjusted EBIT margin of 8% and generating consistently strong adjusted free cash flow.
Production will cease immediately at its Camaçari and Taubaté factories in Brazil, however, production of some parts will continue for a few months to support after-sales sales inventories, said Ford. 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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