Ford posts $3.0 billion operating loss, announces more cuts
FoMoCo today posted a $3.0 billion after-tax operating loss in the third-quarter. The company is now taking further steps to cut costs by eliminating more salaried positions and cutting other operations to keep its restructuring plan on track.
Ford reported a net loss of $129 million in the third-quarter. It said it will cut 10 percent of its North American salaried payroll. Ford also announced a 15 percent cut in white-collar jobs earlier this year.
Total revenue for Ford dropped to $32.1 billion, down $9 billion from the same period last year.
Follow the jump for the press release.
- Net loss of $129 million, or $0.06 a share, for the third quarter of 2008
- Pre-tax loss of $2.7 billion from continuing operations, excluding special items ++
- Favorable curtailment gain in excess of $2 billion related to approval of retiree health care agreement
- Company remains on track to achieve $5 billion in cost reductions in North America by the end of 2008 compared with 2005 (at constant volume, mix and exchange; excluding special items)
- Automotive gross cash (including cash and cash equivalents, net marketable securities and loaned securities) on Sept. 30, 2008 totals $18.9 billion +++
- Available credit lines total $10.7 billion; overall liquidity totals $29.6 billion
- Company planning further cost and cash improvements to continue implementing Ford”s product-led transformation plan and offset continued weakness in the global automotive industry
DEARBORN, Mich., Nov. 7, 2008 ““ Ford Motor Company [NYSE: F] today reported a third quarter net loss of $129 million, or 6 cents per share. This compares with a net loss of $380 million, or 19 cents per share, in the third quarter of 2007. Ford”s third quarter pre-tax operating loss from continuing operations, excluding special items, was $2.7 billion, down from a $194 million profit a year ago.
The company also today announced additional actions to reduce costs and improve Automotive gross cash to enable Ford to continue to implement its product-led transformation plan despite the continued weakness in the global automotive market and economic environment.
Improvement actions include: an additional 10 percent reduction in North American salaried personnel-related costs; a reduction in capital spending enabled by efficiencies in Ford”s global engineering and product development; a reduction in manufacturing, information technology, and advertising costs due to the company”s “One Ford” global operations; and a reduction of inventories globally. Ford also said it would continue to explore divestitures of non-core assets and utilize equity-for-debt swaps and other incremental sources of financing to strengthen the company”s balance sheet.
At the same time, Ford reiterated its continued investment in the smaller, more fuel-efficient, high-quality products that will result in a more balanced global portfolio. Ford confirmed that nearly all planned product programs remain on track and on time ““ aside from a few select vehicles that will be deferred until industry volumes recover. Ford will, however, reduce spending for large vehicles in declining segments.
“We continue to take fast and decisive action implementing our plan and responding to the rapidly changing business environment,” said Ford President and CEO Alan Mulally. “We have a strategy that is broad and specific enough to handle the dramatic changes in today”s environment. We will continue to assess the rapidly changing business environment and modify implementation of our plan accordingly.”
THIRD QUARTER 2008 RESULTS
The 2008 operating data discussed below exclude Jaguar Land Rover, which was sold on June 2, 2008. Jaguar Land Rover and Aston Martin data are, however, included in the 2007 data, except where otherwise noted. See tables following “Safe Harbor/Risk Factors” for the amounts attributable to Jaguar Land Rover and any necessary reconciliation to U.S. GAAP.
On an after-tax basis, Ford”s third quarter operating loss from continuing operations, excluding special items, was about $3 billion, or $1.31 per share, compared with a loss of $24 million, or 1 cent per share, a year ago.
Ford”s third quarter revenue was $32.1 billion, down from $41.1 billion a year ago. The decline reflects lower volume, the sale of Jaguar Land Rover, changing product mix and lower net pricing, partly offset by favorable changes in currency exchange rates.
Special items improved pre-tax results by $2.2 billion in the third quarter, or $1.25 per share, which is primarily due to the retiree health care curtailment gain in excess of $2 billion related to the approval of the retiree health care settlement agreement with the United Auto Workers.
Automotive gross cash, including cash and cash equivalents, net marketable securities and loaned securities, was $18.9 billion on Sept. 30, down from $26.6 billion at the end of the second quarter. The decrease primarily reflects Automotive pre-tax operating losses, changes in working capital and other timing differences, and upfront subvention payments to Ford Credit.
Ford”s Automotive cash flow during the third quarter was significantly affected by a number of unique factors during the quarter, including the decision to reduce truck production to allow for an orderly sell-down of dealer inventories to make way for new models. Overall, Ford”s global third quarter production levels were more than 100,000 units below retail sales and nearly 500,000 units below the second quarter levels. This had a substantial impact on profits, and the decline in production resulted in about a $3 billion reduction in payables during the quarter.
“Strengthening our balance sheet has been and remains a core element of our transformation plan,” said Lewis Booth, Ford executive vice president and chief financial officer. “We were fortunate to have gone to the markets at the right time two years ago to obtain significant liquidity to implement our plan and invest in the new products that will secure our future. We will continue to aggressively reduce costs and manage our cash with absolute discipline to ensure we have the resources to fund our plan going forward.”
In addition, Ford said it will continue working with a number of governments around the world to maximize the availability of funding to provide further protection against the uncertain economic environment that the entire automotive industry is facing.