Ford posts massive loss, to restate results

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.

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."

BTW KY grandma, this will not be pretty, if you are not keen on reality read no further.

I did not disparage your faith whats so ever. My comments had nothing to do with Hate at all, but economics.

Your comment..." who has been connected to Ford Motor Company for four generations"

Shows how out of touch with american business climate that position is. Unless you are a large stock holder or an executive level managment( board member) in a corporation, very few people stay with the same company more than 7 years let alone 4 generations.

The problem is the american auto industry has paid FAR FAR FAR too much money on unskilled labor. This did several things, one made poor qualitiy cars too expensive. Made people with little education believe their decision to not go on to better thenselves through education and initiative was good. Also gave those workers a sense of identity and entitlement in a product rather to themselves.

If your family worked for the same company for 4 generations at union wages you got away with more than most could statistically. Good for you, however admit that it was those very union demands and protection of half assed work rules that played a major part in destroying an industry.

While in the 80s-90's while people with far more education suffered by not finding jobs the union protected your jobs. Good for you, but while they were doing that thier demands were undermining the very business that they feed off of.

The auto industry is dying of a self inflicted wound. There were plenty of warnings in the media and the like that your family should have diversified their economic base. You made your decision, now deal with it without accusing someone of not buying a ford of "throwing your husband out of work".

I am sure you will make it with God's help.

By the way, just for the record please state the Book, chapter and verse where it says," hate the sin but love the sinner" Just curious.

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