Ford to take $800M 4Q charge on Venezuelan currency woes

The Ford logo is seen on cars for sale at a Ford dealership, July 1, 2012. (AP / Seth Perlman)

DETROIT -- Ford says it will take an $800 million charge in the fourth quarter because of exchange rate problems between the Venezuelan bolivar and the U.S. dollar.

The company says the charge will cut fourth-quarter net income by $700 million, after deferred tax benefits. But the automaker still expects a full-year pretax profit of $6 billion when it reports 2014 earnings Thursday.

In September, Ford cut its full-year pretax profit forecast to $6 billion. That's down from $8.6 billion in 2013.

Ford says in a regulatory filing that the company can no longer exchange bolivars to dollars due to Venezuelan currency exchange controls. The company says the controls have limited auto parts availability and have cut into normal production. But Ford says it will continue operations there for the foreseeable future. The Dearborn, Michigan, automaker has had operations in Venezuela for 53 years.

The company's filing says its financial results in the future won't include its Venezuelan operations. Ford plans to record cash and recognize income from the country when it is paid for parts. Ford says it will work with Venezuelan government agencies "to ensure they understand our Venezuelan operations' business needs and potential production opportunities."

In a note to investors, Citi analyst Itay Michaeli questioned whether General Motors would make a similar move. A GM spokesman would not comment on the matter.

Ford's move to a cost method of accounting in Venezuela eliminates currency volatility that hurt Ford's results last year, Michaeli wrote. "Since automaker stocks and volatility clearly don't mix well, we view this accounting move as a positive," he wrote.

Ford shares slipped 9 cents to $14.94 in afternoon trading Friday. They have traded in a range of $13.26 to $18.12 in the past year.