Ford estimates a $2.2 billion pre-tax hit in fourth quarter due to pension plans
Ford Motor Co said that its fourth quarter earnings will be affected by a pre-tax loss of up to $2.2 billion caused by a higher contribution to its employees’ pension plans.
The higher contribution was due to a decrease in discount rates, which leads to a larger amount of money to be contributed for future pension benefits.
Ford announced a $2 billion loss linked to pension plans outside the United States, and $600 million loss related to other post-retirement employee benefit plans worldwide.
The overall loss was offset by a $400 million gain attributed to pension plans in the United States.
Considering after tax cut, the loss is estimated to cut down Ford’s net income for the fourth quarter by as much as $1.7 billion. However, the loss will not affect the adjusted earnings per share since it is a special item, the company said.