Global car-makers post Q1 losses

SOME of the world’s biggest car-makers have reported their financial results for the first quarter of 2009 and it almost goes without saying that they did not make great reading.

But amid the gloom were some silver linings. For example, while Ford Motor Co posted a loss of $US1.4 billion ($A2.0 billion) for the period, the company said it would not need to ask for federal loans after almost halving its cash-burn from the last quarter of 2008.

Ford chewed through $US3.7 billion ($A5.2 billion) in the quarter, compared with $US7.2 billion ($A10.2 billion) the previous quarter, but still has $US21.3 billion ($A30.2 billion) on hand.

Mitsubishi was the first Japanese car-maker to announce its full-year results – the Japanese fiscal year ends on March 31 – posting a loss of ¥54.9 billion ($A806 million) compared with a profit of ¥34.7 billion ($A510 million) the previous year.

Global sales for Mitsubishi dropped 22 per cent to 1.06 million vehicles, and the Japanese company expects the downturn to continue well into 2009. It has forecast a further 13 per cent decline to 932,000 vehicles in the year ahead, but cost-cutting measures will result in an anticipated return to profit of ¥5.0 billion ($A73 million).

Chrysler’s potential saviour, Italy’s Fiat Group, reported a big loss of €411 million ($A757 million) in Turin – down from a profit of €427m ($A787 million) a year ago – but anticipates improved trading conditions throughout the remainder of 2009.

Ferrari was the best-performed division in the group, contributing a profit of €54m ($A100 million) to Fiat’s bottom line.



Left: Volkswagen Passat production.

Still in Europe, Volkswagen made headlines by announcing a 74 per cent drop in profit, but at least it remains in profit whereas other companies cannot even be measured in percentage terms because they have gone from profit into loss.

On the other hand, VW would have recorded a loss itself had it not been for selling its Brazilian commercial vehicle business to German truckmaker MAN for €600 million ($A1.1 billion).

The bottom line for VW, Europe’s largest car-maker, is that it made €243 million ($A448 million) in the first quarter compared with a €929 million ($A1.7 billion) profit in the first quarter of 2008 as sales dropped 16 per cent to 1.35 million units.

In France, PSA Peugeot Citroen reported a global sales drop of 18.7 per cent to 713,000 units. Although it did not reveal how much the company lost in the period, it confirmed its forecast for another loss for 2009, having lost €343 million last year ($A632 million).

Ford’s North American operation was the biggest contributor to its first quarter loss, dropping $US637 million ($A904 million) pre-tax, but Ford of Europe was not far behind with a loss of $US550 million ($A780 million) – down from a profit of $US739 million ($A1.05 billion) a year ago.

Volvo’s result was aided by favourable exchange rates and restructuring, but the Swedish operation still contributed a pre-tax loss of $US255 million ($A362 million) compared with a $US151 million ($A214 million) loss a year ago and negotiations for its sale have begun.

Ford’s Asia Pacific and Africa operation, which includes Australia, contributed $US96 million ($A136 million) to the loss compared with a $US1 million ($A1.4 million) profit a year ago, while the South American division was alone in turning a profit – making $US63 million ($A89 million), down from $US257 million ($A364 million) in 2008.

Investors have reacted positively to Ford’s situation in the US, resulting in its shares doubling in price over the past seven weeks.

Chief financial officer Lewis Booth said the company’s cash burn rate would reduce even further over the course of 2009.

“Successful debt restructuring, coupled with previously announced agreements with the United Auto Workers, will strengthen Ford's balance sheet and will result in significant savings going forward,” said Mr Booth.

“On the product side, our global line-up has never been stronger. We remain hopeful that the government stimulus actions around the world will help improve auto demand, particularly in the second half of this year.”

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