 Troubled Ford posts $8.7b loss
(China Daily)
Updated: 2008-07-25 07:47 Ford Motor Co, the world's third-largest automaker, posted a second-quarter loss of $8.7 billion and said it will convert three truck factories to produce small cars as rising gasoline prices sap US truck sales. The net loss of $3.88 a share compared with a profit of $750 million, or 31 cents, a year earlier, Ford said in a statement distributed yesterday at its Dearborn, Michigan, headquarters. The figure included $8 billion in pretax writedowns of North American plants and assets of Ford Motor Credit Co. The results mark the sixth loss in eight quarters under Chief Executive Officer Alan Mulally, recruited from Boeing Co to restore growth at the automaker. Gasoline on its way to $4 a gallon and plunging sales of F-Series pickups forced Mulally in May to abandon his target of returning to profit in 2009. "This is going to be an extremely painful year," Mirko Mikelic, a senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, said in an interview before earnings were released. "The F-150 is really where they've made money for years, and that's gone." Ford said it would convert truck plants in Michigan, Kentucky and Mexico into making cars. The Mexican plant conversion was announced previously. The F-150 slide has contributed to a 24 percent industrywide decline in full-sized pickup sales this year. US auto sales have dropped eight straight months and are down 10 percent through June. J.D. Power and Associates, citing a deteriorating US economy, yesterday reduced its forecast for the year to 14.2 million sales, the lowest in 15 years. Excluding costs Ford considers one-time expenses, the loss was $1.38 billion, or 62 cents. On that basis, Ford was expected to report a loss of 28 cents a share, the average estimate of 12 analysts. Scaling back Ford is scaling back in 2008 after paring 46,300 jobs in North America the past two years. The automaker began dismissing salaried employees in June as part of a plan to trim those labor costs by 15 percent. About 4,200 US factory workers accepted buyouts in the first quarter, and Ford is planning to make offers at most of its US plants. Gasoline averaged $3.76 a gallon during the quarter, a 25 percent increase from the same period a year earlier, according to motorist group AAA. Consumers responded by abandoning trucks and shifting to cars and smaller SUVs. Sales of the F-Series, which include the F-150 truck, fell 31 percent in the quarter to 126,575, overwhelming sales gains for models such as the Focus and Fusion sedans. The F-Series accounts for about a quarter of Ford's US vehicle sales. F-Series sales slid 23 percent for the first half, outpacing a 14 percent companywide decline. Agencies (China Daily 07/25/2008 page17) |
