Ford posts $4.2 billion pre-tax remeasurement loss

In a report filed on Friday, Ford Motor Company has recorded a pre-tax remeasurement loss of $4.2 billion due to pension plans and post-retirement employee (OPEB) benefits. On an after-tax basis, the remeasurement loss is expected to reduce net income by about $2.8 billion in 2016. It’s the first year Ford has used the mark-to-market method to account for employee benefits, which sees gains and losses measured in the year incurred rather than amortising them over years. The remeasurement is reported separately from yearly profits as an ongoing expense, and is not indicative of operating results from the industry. The remeasurement means that underfunding of Ford pensions has increased; pensions were underfunded by $11.55 billion and OPEB plans by $8.2 billion at the end of 2015. This has grown to $12.4 billion and $8 billion respectively. Details of the plans’ assets and liabilities have yet to be released. Full-year results are expected this Friday, and Ford projects the company will meet pre-tax profit expectations of $14.2 billion for 2016. This in line with 2015’s $14 billion pre-tax profit, which was recognised as a successful year despite a slowdown of growth in China.