Ford Posts $8.7Bn Loss
Ford (F) disclosed its largest quarterly loss in history — $8.7 billion — Thursday as it announced it will convert two truck plants to make cars and quicken its move toward a lineup of smaller, fuel-efficient vehicles.
The bulk of the loss, which amounted to $3.88 a share, came from markdowns in the value of Ford’s assets in light of a slumping auto market that no longer favors the large, big-profit pickups and SUVs that drove Ford’s earnings for years. The loss compares with net profit of $750 million, or 31 cents a share, in the quarter a year ago.
The $8.67 billion loss was the 24th worst in U.S. history, according to Standard & Poor’s.
Excluding $8 billion in special charges — including $5.3 billion for those markdowns in its troubled North American operations and $2.1 billion for Ford Credit — the automaker had a $1 billion pre-tax loss from continuing operations, amounting to 62 cents a share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a loss of 27 cents a share.
Ford’s second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.
The company said it has $26.6 billion in cash. It doesn’t expect to be profitable this year or through 2009. Ford blew through $2.1 billion of its cash stockpile in the second quarter.
Wall Street reacted swiftly, sending Ford shares down 10% in midday trading.
CEO Alan Mulally said Ford’s return to profitability depends on a rapid transformation to smaller vehicles and advanced, gas-saving engines. That’s a big departure from the Lincoln Navigator SUVs, Ford Explorers and F-150 pickups that led the company in the past. Even sales of crossovers — SUV-like vehicles based on a car chassis that are more fuel-friendly than truck-based SUVs— have tapered off.
“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,” Mulally said.
To get there, Ford announced the “significant acceleration” of its metamorphosis by:
Converting plants. Michigan Truck Plant in Wayne, Mich., will be converted to produce a new line of small cars based on a chassis that will be the basis of Ford cars around the world.
Production of the Navigator and Ford Expeditions made there now will be moved to the Kentucky Truck Plant in Louisville.
A Mexican factory that makes F-Series pickups will be retooled to make the Fiesta, smallest car in Ford’s U.S. lineup, but that’s not due to arrive until 2010. A Ford plant in Minneapolis-St. Paul that was supposed to close next year will be kept open at least through 2011 to meet demand for compact Ranger pickups.
Source: USA Today.
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