Posted on 10/23/2006 8:02:13 AM PDT by Republicain
DEARBORN, Michigan (AFP) - Struggling US auto giant Ford Motor Co. has posted a mammoth quarterly net loss of 5.8 billion dollars as restructuring costs hammered its earnings.
Ford also spooked investors by revealing it would restate results from 2001 through to this year's third quarter, "to correct the accounting for certain derivative transactions" by its consumer credit division.
Ford's newly appointed chief executive, former Boeing executive Alan Mulally, said Monday the results were "clearly unacceptable" and vowed to make more of the smaller, fuel-efficient vehicles pioneered by Japanese automakers.
Ford's loss for the third quarter ended last month included heavy provisions for its hard-hitting restructuring plan, which foresees plant closures and thousands of job cuts to restore profitability.
With those provisions omitted, its loss came to 1.2 billion dollars, compared to 191 million dollars before exceptional items a year earlier.
That translated into a loss of 62 cents per share, a penny more than Wall Street's average forecast of 61 cents.
The Ford group's turnover in the quarter was down 6.0 percent at 32.6 billion dollars.
Ford said its poor performance in the past three months reflected "operating challenges" in North America, Asia-Pacific and Africa, and its Premier Automotive Group (PAG) division.
"We are committed to dealing decisively with the fundamental business reality that customer demand is shifting to smaller, more efficient vehicles," Mulally said.
"Our focused priorities are to restructure aggressively to operate profitably at lower volumes, and to accelerate the development of new, more efficient vehicles that customers really want."
Like its Detroit rival General Motors, Ford has struggled against an onslaught on its home turf by Asian carmakers led by Japan's Toyota.
At a time of high fuel prices, customers have been shunning the US manufacturers' money-spinning pick-up trucks and sport utility vehicles.
In early trade Monday, Ford's share price was down 1.5 percent at 7.89 dollars.
JPMorgan auto analyst Himanshu Patel said things were likely to get worse at Ford before they get better, describing a "potential for a late-2007 recovery".
The performance of key divisions such as PAG, which includes Jaguar, Volvo, Land Rover and Aston Martin, has also proven disappointing for Ford.
PAG reported a pre-tax loss of 593 million dollars for the third quarter, up from a pre-tax loss of 108 million for the same period in 2005.
Ford said in August it was looking to sell Aston Martin, immortalised by fictional superspy James Bond, saying it wanted to free up resources for its other auto badges.
The divestment would form part of an accelerated restructuring that foresees the closure of 16 facilities in North America and the loss of 45,000 jobs by 2008.
Announcing the earnings recalculation, Ford said that it had discovered that since 2001, certain interest rate swaps conducted by Ford Motor Credit Co. to hedge interest rate risk to the group's debt were accounted incorrectly.
"Our overall hedging strategy is sound," insisted Ford's chief financial officer, Don Leclair.
"We will correct our accounting for these types of derivative instruments. We remain committed to strong internal controls and reporting transparency," he stressed.
Analysts believe meanwhile that Ford could become the next target of alliance talks now that discussions on a global tie-up between GM and Renault-Nissan have failed.
"We have great global assets and resources that we will leverage to significantly improve our product strategy, our production efficiency and quality," Mulally said.
"These actions will lead to profitable growth of our business over the long term."
You will love the Fusion. My son has one (24) and loves it. We will have to turn it in when my husband retires, but we are thinking about buying it. Or else he will have to drive the junker Volvo.
See post #19
Between Ford, and now Chevy rubbing John Cougar Mellancamp's political messages in our face, it's almost as if they want to kill off the remnants of the U.S. auto industry. It's sad.
I didn't put your husband out of work, the company did.
I kinda want the new 3.6 liter Fusion/Milan to come out for 2008, however.. I'll probably go with a Milan at this point. They aren't cheap for the good models though, but they are solid cars as far as I can tell.
The only next step up is the Acura TL for $10k more.
How many Fords did you own before you came up with that conclusion? Todays quality numbers are only one tenth of one percent different from the worst to the best. As a typical engineer, I'd like to see your data.
Also, I test drove the 4 and 6 cylinder Fusions. The 4 should be discontinued. There's not enough power to even speed up to 60 in a safe fashion. The 6 has good power though.
I owned a 1985 Ford Tempo that costed me over $3,000 in repairs.
No more Fixed Or Repaired Dailys for me.
My nephew just got a new Milan. With the zero percent financing and the 72 month payment plan it was hard for a young person to pass up. He really likes it. If you need a Friends/Family discount, email me privately. We have a few left.
Thought so. In fact, I owned a 1984 Topaz, that I loved. Sold it to a friend, who then gave it to his son. Who then eventually totaled it. As young men are apt to do.
Well, I just got my 88 Acura back running, so I'm hoping not to be in the market until spring :)
However, the Fusion really impressed me. My only complaint is that the new 2007's are hard to find with ABS brakes easily. I hope that'll change soon. I also think that the 'comfort package' stuff should be much cheaper or standard. Auto-lights should be standard by now.
Anyway, when I get one, it'll depend on how long I can make this Acura last. I really want to wait for next year's better engine for the 08's. But, if I need to, I'll get a decked out 07 Milan probably.
Thanks for the offer, btw.
I OWN a 1998 Toyota Camry that has cost $2k in the past two years alone, and still isn't right.
I guess Toyotas are crap, too.
/sarc
I will never buy the product of any company
that fires employees who, on their own time,
own computer, own religoius views web page,
say that they *disagree* with the homosexual
lifestyle, and are then harassed by the
homosexual sexual deviates that run their
companys HR Dept.
Doesn't mean i wom't buy american..just
means i won't support *any* company that
tries to force their sexual defect, societally
destructive, "new normal" own everyones throats.
Like the friggin KGB, saying the "state"
detemines what is moral, and what religion must be.
"We the People.." remember? NOT "We the
slave serfs of the benign (for now) State.."
and what killed the TBird - was predatory pricing by the dealer network. all the initial interest in the cars, was bled away by dealers asking $5-10K over sticker for them. that finished it off, once you kill off that initial interest in a "niche" car with that, its dead.
Bill Ford was quoted saying the car was 1,000 pounds overweight. Sales of T-bird actually took away from sales of other Ford products.
"Ford also spooked investors by revealing it would restate results from 2001 through to this year's third quarter, "to correct the accounting for certain derivative transactions" by its consumer credit division."
If the restatement makes things look better than before, it will be astonishing. Five years of chicanery or honest mistake? I'd be 'spooked' too.
I've always owned Fords. I have had 3 Escorts, 1 Tempo, 1 Ranger and a Windstar.
My present 1995 Escort has been very good to me. However, it has 135,000 miles on it and I need something reliable for the winter. So, the wife and I went car shopping this weekend.
The Focus and Fusion just don't compare well with similar Toyota and Honda products. The Focus is a piece of junk and the Fusion, which was supposed to be the Taurus replacement, is only slightly better than the old Escort that I own (but for a whole lot more money). I really would have preferred to buy another Ford, but my hard earned money is going towards the better product.
I owned an 84 Tempo, and 86 Escort and a 90 Ford Ranger.
84 Tempo was a piece of junk. Rode good, engine was 20 years out of date and never ran right.
86 Escort - Leaked water into the passenger compartment when new, water pump repleaced at 25,000 miles, replaced again at 60,000 miles, radiator leaked, had oil in the air intake when I got rid of it.
90 Ford Ranger - Best of the lot. Never got advertized gas mileage, had to replace the air conditioner condensor because it had an unrepairable leak.
In 1993 I bought a Honda Civic. Still driving it 13 years and 197,000 miles later. STILL get better than factory advertized mileage (39 mpg around town).
Bought a 1995 Honda Odyssey, then traded up to a 2003 Odyssey.
Will not buy another Ford car. Might buy a pickup if they didn't cost 25,000.
Our law office had a call from a Ford employee who was going to be losing her job. Her husband works at the same plant and is also losing his job. The plant is one that Ford is closing. They have both worked there for 6 years and earn over $30.00/hour each. Ford is giving each of them $100,000 as a going-away present. I'm sorry, but I have a hard time feeling sympathy for either the company or the employees.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.