Record loss for FoMoCo
BY MARTON PETTENDY | 25th Jul 2008
Simultaneously, FoMoCo also revealed it will convert two truck plants to make cars and fast-track its plans to offer a range of smaller, more fuel-efficient vehicles in the US.
The majority of the unprecedented quarterly loss was attributable to markdowns in the value of Ford assets following the US auto industry slump driven by slower demand for the Blue Oval’s profit-rich SUVs and pick-up trucks.
The loss amounted to $US3.88 ($A4.06) a share. Excluding $US8 billion ($A8.37 billion) in special charges - comprising $US5.3 billion ($A5.55 billion) in markdowns for its struggling North American operations and $US 2.1 billion for Ford Credit – America’s number two car-maker returned a $US1 billion ($A1.05 billion) pre-tax loss from continuing operations.
That amounted to US62 cents (A64.8 cents) a share – well up on both the US27 cent (A28.3 cent) average forecast by 12 analysts surveyed by Thomson Financial and the US31-cents-a-share (A32.4 cents) reduction Ford posted in the June quarter of 2007, when the company made a $US750 million ($A784.7 million) loss.
Adjusted to reflect the sale of Aston Martin, plus Jaguar and Land Rover to India's Tata Motors, Ford posted second-quarter revenues of $US38.6 billion ($A40.4 billion), down $5.6 billion ($A5.86 billion) from the same quarter last year, when it earned $US44.2 billion ($A46.26 billion).
Outside the US, Ford posted a $US582 million ($A609 million) profit in Europe, a $US388 million ($A406) profit in South America and a $US50 million ($A52 million) profit from its Asia-Pacific-Africa division, including Australia.
To reduce its reliance on the F-150 pick-up and Explorer SUV by “significantly accelerating” the production of a range of smaller vehicles, Ford said it will convert its Michigan Truck Plant in Wayne, Michigan to produce a new line of global small cars.
Production of the Lincoln Navigator and Ford Expedition previously manufactured there will be shifted to Ford’s Kentucky Truck Plant in Louisville.
Similarly, the Mexican plant that produces the F-Series pick-up will be retooled to build the Fiesta, while Ford will also look to Europe to deliver a new small Mercury model and another unnamed model in the US by 2010.
The company also announced it will: base its next-generation Explorer on a monocoque design to help reduce fuel consumption by 25 per cent, double its hybrid vehicle line-up, and widen the employment of its six-speed automatic transmission.
Ford president and CEO Alan Mulally said the historic US company’s return to profitability depends on a rapid transformation to smaller vehicles and fuel-saving technologies.
“We are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America.
“The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term,” said Mr Mulally.
Ford says it has $US26.6 billion ($A27.8 billion) in cash, but doesn’t expect to return a profit this year or in 2009, when it will continue reducing its workforce through buyouts.
It hopes to maintain a market share of about 14 per cent in the US, where its sales were down 14 per cent in the first half of 2008 – a period in which overall US vehicle sales slumped by 10 per cent.