Skip to comments.Ford May Report Worst Loss in History
Posted on 01/24/2007 5:37:16 PM PST by Flavius
DETROIT (AP) -- Ford Motor Co. could post the worst annual loss in its storied 103-year history when the automaker releases its 2006 earnings on Thursday.
The old record net loss was $7.39 billion in 1992, but through three quarters of this year, Ford already had lost $7 billion.
Fourteen analysts polled by Thomson Financial expect more red ink in the fourth quarter, predicting an average quarterly loss of $1.01 per share and $1.35 per share for the year, excluding special items.
"The fourth quarter's going to look real ugly," said Erich Merkle, director of forecasting for the auto consulting company IRN Inc. in Grand Rapids, Mich. He predicted Ford would get as much bad news out of the way as it can for the end of 2006, beating the 1992 record.
"Let's just air all our dirty laundry all at once. Take the medicine and then we can move on. I definitely think that's their philosophy, knowing it's going to be real poor," Merkle said.
Burnham Securities analyst David Healy said in a note to investors that Ford has yet to recover from its finances being wrecked by collapsing sales of its F-series pickup trucks and truck-based sport utility vehicles.
The company made a profit of $1.44 billion in 2005, and in the fourth quarter of that year, it produced and shipped 355,000 of the high-profit large and mid-sized truck models, Healy said. That dropped by 40 percent to 213,000 in the final quarter of last year, he said.
"In our view, most of the year-to-year increase in losses lies in the 142,000 year-to-year decline in these high-profit models," Healy said.
Production of other Ford models dropped by 53,000 in the fourth quarter of last year compared to the last quarter of 2005, driven by dealer stock reductions and the company's strategy to reduce traditional low-profit sales to rental car companies, Healy said.
Efraim Levy, senior industry analyst for Standard & Poor's, predicted Ford would post a $2 billion net loss for the last quarter of 2006.
Like other analysts, he sees bottom-line improvement in 2007 even though he predicts revenues will drop by 7 percent compared to 2006. He still sees a loss for this year, but said the improvement will come as Ford becomes more efficient and cuts costs by slicing its blue- and white-collar work forces.
About 38,000 hourly workers have signed up for buyout or early retirement offers from the company, and Ford plans to cut its white-collar work force by 14,000 with buyouts and early retirements.
The company has mortgaged its assets to borrow up to $23.4 billion to fund a massive restructuring plan and cover billions in losses expected until 2009. It expects to burn up $17 billion in cash during the next two years before returning to profitability.
Ford's revenue will continue to suffer in 2007 from intense competition, an expected lower overall auto market and weakness in Ford's financial services business, Levy said.
Ford has rolled out or will introduce several new or updated products during 2007, including the Edge crossover, new F-series Super Duty pickups, a redesigned Focus small car and an updated Five Hundred larger sedan.
But Levy said the company's new vehicles won't be strong enough for it to recover much this year.
"The new products aren't that exciting overall," he said.
Ford's sales last year were 8 percent below 2005 figures at about 2.9 million vehicles. Ford attributed the decline to a drop in truck and sport utility vehicle sales and the end of production for the Taurus sedan, which largely was sold to fleet buyers last year.
Ford is the first of the Detroit-area automakers to release its earnings for the year. General Motors Corp., which lost more than $3 billion in the first nine months of last year, will release its fourth-quarter and annual earnings on Tuesday.
DaimlerChrysler AG, which lost $1.5 billion in the third quarter, is to release its earnings on Feb. 14.
Ford Motor Co.: http://www.ford.com
So since #1 car manufacturer Toyota also builds hideous, bubbly cars,in my opinion, one can assume the only loyalty is in years of reliable service or perception of that track record.
Since parts are virtually from same suppliers for all car manufacturers, then it can be the no hassle repair/quality customer service that builds brand loyalty.
Lastly, for foreign cars there are no union dues on a car, which I guess is $1500 premium per USA vehicle.
UNION workers and pension plans.
Ford of Michigan or Ford of Tennesse? :)
Sounds like they're not feeling very GAY over at Ford.
and for this they were paying $900,000 per year for Mark Fields to commute to Miami on weekends?
Although there are Ford brands- Jag and Land Rover.
well i was trying to focus on plastic on rubber wheels that passes for "trucks" these days
You also pay somewhat more than $500 per vehicle for the insurance premium that the manufacturer has to carry in the USA.
Ford will collapse. Someone else will buy the plant up and continue producing cars... this time without having to support the ridiculous union compensation levels and after firing all the managers that brought the company to this pass. The govt will end up carrying the weight of the ridiculous pensions.
Until ford can bulid a full size pick up worth a dam i will keep buying toyotas every ten years and worry only about gas tires and oil
the jag looks like ford Taurus with 20 cent more expensive head lights
i just cannot believe that in a country as creative as United States
the car industry relies on old ceo's old accountants to make designs decisions
its really a crime, i know there are probably thousand of talented kids that are not allowed to create
that part is management fault as well,
off course all in my opinion
The govt will end up carrying the weight of the ridiculous pensions.= You and me
I figured that the brighter people here would understand that without having to explain it. Thanks for helping the others out.
Ford will survive. No Ford fan I, but the family still has enough money and borrowing power to survive as a smaller maker. Why Mercury ? Why this stupid pig they're trying to pass off as a Lincoln SUV ? Gad.
Well, Ford is still better than the NY Times.
Boeing turned it around, so can GM and Ford.
ahm well yes shredded paper absorbs much more then shredded car
Chrysler's second nearest bankruptcy came as a result of their designs in the late forties/early fifties. They did extensive surveys about what customers wanted. Looks was far down the list. Chrysler designed the boxy cars that people said they wanted and got laughed at for their efforts.
Maybe Toyota just builds cars that people will buy. Seems to work for them. Buyers like to think about "style" and performance but many buy on price and reliability.
Per news reports also out today, the UAW is in negotiations for the union to assume retiree health benefits, which could potentially save $1000+ per vehicle.
We'll see if it happens, but if it does, it would almost guarantee to save the companies and the taxpayers $$$, as the savings could be greater than the per vehicle losses the companies are currently seeing.
I guess putting all that time and energy into engineering a reliable, attractive, affordable product didn't seem necessary.
And then there's the unions.
Well it was for the trolls and and lurkers from du and for Sean Hannity he he he