General Motors told analysts that it will take a $600 million charge against its second quarter earnings due to the devaluation of Venezuela’s currency, the bolívar.
Though Venezuela represents a relatively small automotive market, the country’s economy has suffered greatly from declining oil prices and rampant inflation. The situation, in fact, has some bondholders fearing that the nation may default on its debt.
“Despite the impact of this, the Venezuelan market remains very important to us,” GM controller and chief accounting officer Tom Timko told analysts on a conference call. He also added that the charge will not impact the company’s operating income.
In its corporate filing associated with its first quarter 2015 financial results, General Motors wrote that it is changing the way in which it values assets and liabilities denominated in non-U.S. currencies. The company did not state what effect the change would have on its financial results.
By comparison, cross-town rival Ford Motor Company announced earlier this year that it will take an $800 million charge due to the difficulty of converting bolivars to dollars.