Ford reports $8bn losses
Car maker cuts back on production of gas guzzling vehicles as it posts huge loss.
Don Leclair, Ford’s chief financial officer, said he was confident that the company had the cash needed to ride out the US downturn.
“We’re confident that we have enough liquidity to get through,” he told reporters.
Ford, the second largest US-based vehicle manufacturer, reported a surprise profit in the first quarter, but later warned that a sharp shift in demand toward cars and away from large vehicles due to high petrol prices would pressure its results.
The company plans to convert three large truck and SUV plants to small cars beginning in December and double its production of four-cylinder engines by 2011.
Share losses
Ford’s net loss amounted to $3.88 per share, in the second quarter, compared with net income of $750m or 31 cents per share, a year earlier.
Excluding $8bn of one-time charges, Ford reported a loss of 62 cents per share from continuing operations.
Analysts had expected Ford to report a loss of 25 cents per share excluding one-time items, according to Reuters Estimates.
The items included pre-tax impairment charges of $5.3bn for Ford North America and $2.1bn for Ford Motor Credit due to deteriorating economic conditions, primarily due to the shift from large trucks and SUVs.
Ford also said it assumed that the US economy would begin to recover by early 2010 despite oil prices that will remain “volatile and high”.
The vehicle manufacturer has abandoned a long-standing goal of returning to profitability in 2009 and delayed the launch of a redesigned top-selling F-150 pick-up truck by two months.
The automaker also said it would keep its Mercury brand in addition to Ford and Lincoln, and said the three brands would maintain about a 14 per cent market share in North America.
It will produce a new small car for Mercury in 2010 and the next generation of its signature Explorer SUV would be built on a car platform in 2010.
Job losses
Ford cut 200 white-collar, or office worker, jobs in the second quarter and said most cuts under its cost-cutting plan would take place in July, with charges accruing to third quarter results.
The vehicle-maker also cut about 1,800 North American hourly jobs in the second quarter, and recently said it would extend staff buyouts to union-represented workers at a range of plants as it cuts production capacity.
Ford reported increased pretax profits in Europe, South America and its Asia Pacific Africa region, and ended the quarter with a cash position of $26.6bn, including marketable securities, down $2.1 billion from the first quarter.
Ford posted a $1.3bn pre-tax loss in North America in the quarter, significantly wider than the $270m loss a year earlier, reflecting the sharp deterioration in the vehicle market.
Ford Motor Credit posted a net loss of $1.43bn in the quarter, compared with net income of $62m a year earlier.
Shares fell 42 cents to $5.50 in pre-market trading.