Ford Motors yesterday reported the biggest loss in its 103-year history and one of the largest on record for a car company.
The net loss of $12.7 billion for 2006 exceeds General Motors' $10.6 billion loss in 2005, previously the worst results in recent years by any of Detroit's car-makers. Ford's 2006 figure includes a total of $9.9 billion of fixed-asset impairments and restructuring charges associated with its Way Forward restructuring plan.
However, the $2.8 billion loss before special items was worse than most analysts had expected, and reflected Ford's continuing loss of market share in its core US business. Alan Mulally, chief executive, said its US market share would remain "tough" for the next three quarters. However, he added: "We know where we are, we are dealing with it, and we are on plan."
Ford's total automotive results are expected to be worse in 2007, he said, but the impact of special items would be significantly less at about $1 billion-$2 billion than in 2006. "The after-tax results excluding items will be worse, but we'll have far less in special items," said Don Leclair, chief financial officer.
Under the Way Forward plan, the company is reducing staff, cutting costs and revamping its models. In December it mortgaged its assets to raise $23.5 billion of financing to allow it breathing space as it strives to remake itself as a smaller, more competitive business. Mr Leclair said the company ended the year with cash of $33.9 billion. Ford is shedding about 38,000 hourly workers and 14,000 white-collar employees.
The company is not predicting a return to profit for its North American operations before 2009. The South American and European divisions made profits of $551 million and $469 million respectively in 2006. Premier Automotive Group, which owns the Volvo, Jaguar, Land Rover and Aston Martin brands, made a loss of $327 million before tax, against a loss of $89 million a year ago.
Ford's move to sell its Aston Martin sports car marque has prompted speculation it might want to sell the Jaguar brand as well. - (Financial Times service)
