Ford Expects $0.6 Billion Pension Remeasurement Loss in Q4 2025
The company states: "Ford Motor Company uses the mark-to-market method of accounting for pension and other postretirement employee benefits. Under this method, we recognize pension and OPEB remeasurement gains and losses in income when incurred rather than amortizing them over time as a component of net periodic benefit cost. The remeasurement gains and losses are reported as special items since we believe they are not reflective of our ongoing operating activities. We expect to record a pre-tax remeasurement loss in our fourth quarter 2025 results of approximately $0.6 billion related to our pension and OPEB plans. This includes a $0.3 billion loss associated with pension plans in the United States, a $0.3 billion loss associated with pension plans outside the United States, and an immaterial impact for OPEB plans globally. The remeasurement loss for U.S. plans was largely driven by actuarial losses compared to plan assumptions. The remeasurement loss for non-U.S. plans was largely driven by changes in key plan measurement assumptions, such as improved life expectancy. On an after-tax basis, the remeasurement loss is expected to decrease our net income/(loss) by about $0.5 billion based on the tax impact in the jurisdictions where there are remeasurement gains and losses. Because the remeasurement is a special item, it will not affect our total Company adjusted EBIT or adjusted earnings per share. The remeasurement did not have an effect on our cash in 2025 and does not change our expectations for pension contributions in 2026. In aggregate, our funded plans remain fully funded. Including the impact of remeasurement losses during 2025, we expect the underfunded status for our pension and OPEB plans to be about $0.2 billion and $4.4 billion, respectively, at year-end 2025, compared with $0.5 billion and $4.4 billion, respectively, at year-end 2024."
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Ford Anticipates $600M Loss in Q4 2025 Due to Pension Remeasurement
- Pension Loss Expectation: Ford anticipates a pre-tax remeasurement loss of $600 million in Q4 2025 related to pension and OPEB plans, with half of this loss tied to U.S. pension plans, indicating significant pressure on the company's pension management.
- Net Income Impact: This loss is expected to decrease Ford's Q4 net income by approximately $500 million on an after-tax basis, although it will not affect the company's adjusted EBIT as it is classified as a special item, reflecting the complexity of the company's financial situation.
- Pension Funding Status: By year-end 2025, Ford expects the underfunded status of its pension and OPEB plans to be around $200 million and $4.4 billion, respectively, an improvement from $500 million and $4.4 billion at year-end 2024, indicating progress in pension management.
- Earnings Report Schedule: Ford is set to release its fourth-quarter results after the market close on February 10, and investors should pay close attention to the detailed explanations regarding pension losses and their potential impact on future finances.
General Motors Achieves Record High Performance in 2025
- Strong Performance: General Motors reported a net income of $2.7 billion for 2025, translating to earnings per share of $3.27, exceeding market expectations and demonstrating robust performance amid a slowing auto industry, with projections for continued growth in 2026.
- Increased Shareholder Returns: GM announced a 20% increase in its dividend and a new $6 billion stock buyback authorization, aimed at boosting investor confidence and enhancing its stock price, further solidifying its market position.
- Robust Cash Flow: The company achieved an adjusted free cash flow of $10.6 billion in 2025, a significant increase from $3 billion five years ago, with plans to invest $10 billion to $12 billion over the next two years to expand U.S. manufacturing capacity and reduce tariff exposure.
- Resilience Against Challenges: Despite facing $3.5 billion in tariffs and $1.25 billion in inflation costs, GM has demonstrated strong adaptability through regulatory savings and production optimization, with expectations for continued improvement in costs and profitability.
