Ford narrows loss, offers buyouts

January 24, 2008 7:50:04 AM PST
Ford Motor Co. narrowed its losses in the fourth quarter amid continued weakness in North America, said the outlook for U.S. sales in 2008 remains grim and is making more employee buyout offers to cut costs. Ford is offering buyouts to its 54,000 U.S. hourly workers in a bid to cut costs, Chief Executive Alan Mulally said. The company will also adjust production schedules as demand sags.

In a conference call with analysts and media, Mulally said the United Auto Workers union agreed to two rounds of buyouts at its U.S. plants, with workers expected to leave the company by either March 1 or April 1. He said the bulk of the separations were expected to occur in the second quarter. The buyouts come in addition to a round of buyouts in 2006, when 33,600 U.S. hourly workers left the company.

Ford lost $2.8 billion, or $1.30 per share in the fourth quarter, narrower than a loss of $5.6 billion, or $2.98 per share, in 2006. The full-year loss of $2.7 billion, or $1.35 per share, was significantly better than 2006, when Ford lost $12.6 billion, or $6.72 per share.

"Overall, our plan is working and we continue to show progress," Mulally said.

Dearborn-based Ford reported revenue of $44.1 billion for the fourth quarter, up from $40.3 billion in the year-ago quarter. The company reported full-year revenue of $172.5 billion, up from $160.1 billion in 2006.

Excluding special items, Ford lost 20 cents per share for the quarter and 19 cents per share for the year, in line with Wall Street's expectations. Analysts surveyed by Thomson Financial had predicted a loss of 19 cents per share for the quarter and 17 cents per share for the year.

Special items for the year included a $705 million charge for separation programs in North America and a $208 million gain from the sale of Aston Martin.

Ford shares fell 8 cents to $6.22 in morning trading Thursday. The company lost $3.5 billion for the year in its North American automotive operations, narrower than a loss of $6.0 billion in 2006. Ford said higher net pricing and lower costs helped offset losses from lower sales and unfavorable exchange rates. Full-year revenue for the region was $70.5 billion, up from $69.4 billion a year ago.

In the fourth quarter, Ford lost $1.6 billion in North America, compared with a loss of $2.7 billion in the year-ago quarter. Fourth-quarter revenue was $17.0 billion, up from $15.1 billion a year ago.

Ford took a hit in the U.S. in 2007 when it reduced low-profit sales to rental-car fleets by a third. In another blow to the company, Toyota Motor Corp. outsold Ford to become the No. 2 automaker by U.S. sales in 2007, a position Ford had held for 75 years.

Ford reported a full-year profit of $997 million in Europe, more than double its 2006 profit of $455 million. Ford said the improvement was due to continued cost reductions, higher net pricing and higher sales. Full-year European revenue was $36.5 billion, up from $30.4 billion in 2006. Ford reported a fourth-quarter profit of $223 million on revenue of $10.4 billion in Europe, up slightly from $218 million on revenue of $8.8 billion a year ago.

Earnings also more than doubled in South America, where Ford had a full-year profit of $1.2 billion, up from $551 million a year ago. Full-year revenue improved to $7.6 billion from $5.7 billion a year ago. For the quarter, Ford posted a profit of $418 million in the region, up from $114 million a year ago, and revenue of $2.4 billion, double its 2006 revenue.

Ford's Premier Automotive Group, which includes the luxury Jaguar, Land Rover and Volvo brands, posted a full-year profit of $504 million, compared with a loss of $344 million a year ago. Ford said it reduced costs across all brands and saw higher sales and higher net pricing at Land Rover. Full-year revenue for the brands was $33.2 billion, up from $30.0 billion in 2006.

Ford doesn't break out results for its luxury brands, but said Volvo incurred a loss for the year.

Ford recently decided to keep Volvo but is planning to sell Jaguar and Land Rover. Earlier this month, Ford selected Indian car maker Tata Motors Ltd. as the top bidder for the two British brands.

The luxury brands posted a $59 million profit for the fourth quarter, compared with a profit of $174 million in the year-ago quarter. Ford said the decline was explained by adverse currency exchange rates and product mix at Volvo, which broke even for the quarter, while Jaguar and Land Rover made a profit. Revenue for the unit was $9 billion for the quarter, up from $8.6 billion a year ago.

Ford's credit division, Ford Motor Credit Co., posted a $775 million profit for the year, down from $1.3 billion a year ago as it was hit by higher borrowing costs, higher depreciation expenses for leased vehicles and other factors.

---

On the Net:

Ford Motor Co.: http://www.ford.com


Load Comments