Ford reports smaller loss of $380 million
Although the performance was worse than its second-quarter profit of $750 million, Ford still was in the black for the year and its executives said a turnaround plan is taking hold.
The second-biggest U.S-based automaker also said it is near a deal to sell its Jaguar and Land Rover units but its CEO said there are no plans to sell its Volvo business.
The latest results beat Wall Street expectations, and its shares edged up 6 cents to $8.30 in midday trading.
The net loss amounted to 19 cents per share for the July-September period in contrast to a loss of $2.79 per share in the third quarter of last year.
Much of the loss was attributed to $350 million in special items, including an offer to exchange preferred securities for common stock and personnel reduction costs in Europe and with its Premier Automotive Group, which includes Jaguar, Land Rover and Volvo.
The struggling automaker also reported a $1 billion pretax loss on its home turf, North America, but that was an improvement over the $2.1 billion it lost in the year-ago period.
Revenue rose to $41.1 billion from $37.1 billion a year earlier.
Ford said it expects to sell its Jaguar and Land Rover units early next year, and President and Chief Executive Alan Mulally said it plans to keep Volvo for now, fixing its cost structure and making it a more premium brand. The automaker said it would start disclosing Volvo results separately starting in 2008.
Without special items, the company lost $24 million, or 1 cent per share, for the quarter. That far surpassed Wall Streetís expectations. Fifteen analysts polled by Thomson Financial expected the company to lose 46 cents per share excluding special items.
Ford reported a net profit of $88 million for the first nine months of the year, or 5 cents per share. Thatís more than a $7 billion improvement from the same period last year when the company lost $6.99 billion, or $3.73 per share.
"We are on track to achieve our goal of profitability in 2009,ď Mulally said in a conference call with reporters and industry analysts.
Ford said it has shed 33,600 hourly workers and 10,600 salaried workers since the end of 2005 as part of its restructuring plan. The reductions include factories in a holding company awaiting sale or closure and came mainly from buyouts and early retirement offers.
The company now has 59,700 hourly workers in North America and another 6,200 employed by the holding company. Mulally said Ford will continue to reduce its employment, but he would not say if further buyouts or layoffs are planned.
Last year, Ford mortgaged its assets Ė including its blue oval logo Ė to borrow up to $23.4 billion to fund its turnaround plan. But the company now says the restructuring wonít cost as much as expected.
In the conference call, Chief Financial Officer Don Leclair said Ford now estimates it will burn $12 billion to $14 billion from 2007 through 2009, instead of the previously announced $17 billion.
Fordís financial services arm and operations in South America and Europe reported strong performances, helping to offset losses in North America and in the Premier Automotive Group.
The company said it would start disclosing Volvo results separately starting in 2008, but it would not say if the unit still was for sale.
In South America, Ford made a pretax profit of $386 million, while it made $293 million in Europe.
Ford Motor Credit Co. earned $546 million pretax in the quarter, which was down from $730 million in the year-ago period. Ford Motor Credit focuses on auto and dealer loans and does not issue mortgages, so it is unaffected by troubles in the mortgage industry.
The Premier Automotive groupís performance improved over the third quarter of last year, but it still posted a $97 million pretax loss for the quarter. That compares with a $508 million loss for the same time last year.
Volvo lost money for the quarter, partially offset by a small profit at Jaguar and Land Rover, the company said. It currently does not disclose results for individual units.
Ford predicted it would have a small loss or break even for the full year excluding special items, with substantial year-over-year improvement in its fourth quarter results. But it still expects to lose money in the final quarter of the year on a pretax basis, mainly in North America.
The company posted a net loss of $12.6 billion for the full year in 2006 and a $3.15 billion loss for the year excluding special items.
The report from Ford came a day after General Motors Corp. posted a $39 billion loss for the third quarter, one of the biggest quarterly losses ever in the U.S., as a charge involving unused tax credits ended a string of three profitable quarters for the nationís largest automaker.