TriShield

By DEE-ANN DURBIN and TOM KRISHER, AP Auto Writers
Thu Jul 24, 11:50 AM ET

DEARBORN, Mich. - Ford Motor Co. posted the worst quarterly performance in its history Thursday, losing $8.67 billion in the second quarter.

The company also said it will retool two more North American truck and sport utility vehicle plants to build small, fuel-efficient vehicles, and it announced plans to bring six new small vehicles to North America from Europe by the end of 2012.

The net loss includes $8.03 billion worth of write-offs because the sharp decline in U.S. truck and SUV sales has reduced the value of Ford's North American truck plants and Ford Motor Credit Co.'s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share.

Including the write-downs, Ford lost $3.88 per share in the April-June quarter, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

The second-quarter loss surpassed Ford's previous record quarterly loss, $6.7 billion in the first quarter of 1992.

Second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

Ford has been successful selling cars in Europe, and the company is banking on the new European models to boost sales and revenue as it deals with a market shift from trucks to cars brought on by high gasoline prices.

The company said it has sufficient liquidity to weather the latest downturn in the U.S. auto market without additional borrowing. Ford borrowed $23.4 billion in 2006 to fund its North American turnaround.

"We are pleased that we went to the capital markets at the right time," Ford President and CEO Alan Mulally said in a conference call with investors and media. "We have the scale, the expertise and the financing to execute our plan."

Wall Street wasn't impressed, at least initially. Ford shares dropped 58 cents, or 9.6 percent, to $5.45 in morning trading.

The company said it will retool the Michigan Truck plant in suburban Detroit, shifting its products from large SUVs to make global vehicles off the European Focus platform by 2010.

The SUVs made at Michigan Truck — the Lincoln Navigator and Ford Expedition — will be shifted to the Kentucky Truck plant in Louisville, which makes Ford Super Duty pickups.

The company also will retool the Louisville Assembly Plant, which now builds the Ford Explorer midsize SUV, to produce vehicles on the European Focus frame, starting in 2011.

The company had previously announced it would retool its pickup truck factory in Cuautitlan, Mexico, to build the Fiesta subcompact for North America starting in 2010.

Ford also said its Twin Cities Assembly Plant in St. Paul, Minn., will continue producing the Ranger small pickup through 2011. The plant was scheduled to close next year, but Ranger sales are down just 4 percent in the first half of this year, versus 18 percent for the U.S. light truck market as a whole.

The company also plans to revamp the body shops in nearly all its North American assembly plants so that they will be more flexible and able to respond more quickly to changes in market demands. Chief Financial Officer Don Leclair said it costs about $250 million per plant to make those changes.

Leclair said Ford's capital expenditures will reach $6 billion annually between now and 2010 because of the cost of revamping plants and introducing new products and engines. Ford plans to upgrade or replace all of its engines by 2010.

"What you're seeing is kind of a bubble that we're going to go through ... but early on we're going to see cost savings because of the economies of scale that we're getting as we develop more and more vehicles off of fewer platforms," he said.

Cost cuts also will come from employee layoffs. Ford said 4,000 U.S. hourly workers took buyouts in the second quarter, and the company will continue offering buyouts at targeted U.S. plants. Ford also has announced plans to cut its salaried costs by Aug. 1 through voluntary and involuntary layoffs.

The company said its write-offs included $5.3 billion in North American auto operations and $2.1 billion for Ford Credit because of the drop in the value of the plants and equipment that make trucks and SUVs, and the lower price Ford Credit can fetch for them at auction when leases expire. Leclair said 85 percent of the Ford Credit write-down was triggered by the drop in truck and SUV values.

Ford reported a pretax loss of $1.3 billion in North America because of the deteriorating U.S. market and the shift away from trucks. U.S. sales overall were down 10 percent in the first half of the year, with Ford's sales down 14 percent.

The company, though, continued to be profitable overseas, posting a $582 million profit in Europe and $388 million in South America. The company also made $50 million at its Asia-Pacific-Africa division.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," Mulally said in a statement.

Ford said it does not expect a U.S. economic recovery to start until early 2010.

The company identified only three of the European small vehicles it will bring to North America: the Transit Connect small van, the European Focus and the subcompact Fiesta. Most will be built in North America, and Leclair said some might be exported. Ford already has announced that the Transit Connect will be imported from Turkey.

Ford said the other three vehicles would be identified later, including one that is unique within its segment.

Other possible vehicles are the Kuga small crossover, the C-Max small van and the Mondeo midsize car.

Ford also announced that the next-generation Ford Explorer midsize SUV will come out in 2010 and be built on car underpinnings, making it more fuel efficient than the current truck-based model. And it announced it will build a seven-passenger car-based crossover vehicle for Lincoln in mid-2009.

TriShield

Ford Loses $8.7b in Q2


Ford's time's a ticking

By Robert Farago
July 24, 2008

And there you have it. The hit from Hell, sucking the life out of FoMoCo. Automotive News brings the noise. "In the financial report, Ford said that it took $8.0 billion in special charges to write off the value of troubled assets — including a $5.30 billion charge for Ford North America. The North American unit posted a $1.3 billion pre-tax loss in the quarter compared with a $270 million loss during the same period a year ago."

If not for foreign ops… "Ford said it posted a pre-tax profit of $582 million in Europe during the quarter, up from $262 million. It also turned profits in Asia and South America." If not for Volvo… "The Volvo unit lost $120 million compared with a loss of $91 million a year ago." As promised, Ford announced the truck-related loss along with its plans to turn the not-so-supertanker-anymore around.

Meanwhile, according to Bloomberg, "Ford said it had $26.6 billion in automotive cash at the end of the quarter, down $10.8 billion from a year earlier." Chief Financial Officer Don LeClair is "confident'' Ford has enough liquidity. Sorry. "One time" expenses or no, there's no way Ford can sustain that kind of loss indefinitely. It's a race against the clock, and the clock is in the lead.

http://www.thetruthaboutcars.com/ford-loses-87b-in-q2/

Lickeyman

iTrader: (1)

8.7 BILLION. One quarter? That's what happens when you center an auto company around ONE platform. They were just too tied into the truck/suv's. They really don't have any cars that I would LIKE to own.

The bleeding is going keep coming unless they come out with a hit car...

jmurray87

iTrader: (1)

GM isnt really much better....they focused to much into truck/suvs as well. Both brands are getting there *** kicked for it....id mention chrysler but there already in a deep hole.


I assume they will do what GM is and focus more into cars....with the new camaro out they need to step it up with the best seller they have the mustang.

Reckless

iTrader: (9)

Live by the overpriced gas-guzzling trucks, and then die by them

Whisper

iTrader: (12)

What a glorious punishment for the SUV fad. (Ford and GM both)

LS1LT1

iTrader: (16)

Umm, you people DO understand that North America was in fact BUYING those trucks in record numbers for YEARS right?
And yes those trucks were VERY profitable, not exactly what I'd call stupid business practices, at the time at least.

If three years ago GM and Ford had cut production on their trucks while at the same time upping it on the Cobalt and the Focus you likely all would've STILL been calling them stupid for doing so.

Ya know, it's not all that difficult to call the winner of the Super Bowl the Monday morning after the game.

ULTIMATEORANGESS

iTrader: (4)

youre right and though with a few exceptions i cant stand SUVs but i think this decline in truck sales is only temporary and people will start buying them again once things get better.

that still doesnt mean the big three dont have to be competitive in other areas such as smaller more economical cars. whats confusing to me is this mistake is what gave foreign carmakers their start here decades ago and ford and GM were still to respond and still are.


they need to have different types of vehicles all across their lineups so not only they can stay competitive but so theyre not hit so hard when a certain segment of vehicles has slower sales.

this constant retooling and layoffs and cost cuts really isnt encouraging. every time i read about the big three posting losses in the billions i cant help but think its one step closer to their downfall.


thing is i think GM is making great efforts to be more competitive and buyers still keep going to foreign automakers which really disturbs me.


but i what i dont get is i have trouble believing the ford, GM or chrysler dont have one vehicle that people can buy instead of choosing something foreign.


i know i cant expect people to buy something they dont want but i think investing in a domestic car company right now is important to our economy and should be considered for potential buyers.

THE LAST Z

iTrader: (5)

Henry would be so dissapointed...

Z ROADSTER

General Motors lost (OVER) $ 15 BILLION last qtr !!!
Thats $ 15,000,000,000.00 and no cents to you pal !