News - Ford
Ford reports worst loss in more than 100 years
Dark times: US buyers are turning their backs on SUVs like the Expedition.
Record oil prices and tough Japanese competition hurt Detroit car-maker
29 January 2007
THE Ford Motor Company has reported its worst loss in more than 100 years of manufacturing as it seeks to shed 45,000 jobs and close 16 plants.
The $US12.7 billion 2006 loss comes at a time when US consumers are turning their backs on SUVs, Ford’s traditional strength, and opting for more fuel efficient cars on the back of record high petrol prices.
Its finances were also hurt by attempts to fight off fierce competition from Japanese car manufacturers, like Toyota in the United States, after it made a net profit of $US1.4 billion in 2005.
However, Ford Australia is more insulated from its global parent but the Detroit losses could impact future local budgets.
Ford attributed the losses to massive restructuring costs as it seeks to revive its operations and vehicle sales.
The losses last year included heavy provisions for its extensive restructuring plan, which includes the 16 plant closures across North America.
Ford reported a full year earnings-per-share loss of $US6.79 and a quarterly loss of $3.05.
Excluding certain charges, however, the quarterly loss equated to a worse-than-expected $1.10 per share.
The restructuring and other costs had weighed down earnings by almost $10 billion last year.
During the fourth-quarter of last year Ford said it lost $5.8 billion compared with a loss of $74 million in the same period.
However, Ford executives remain upbeat about the future, saying the company could return to profitability no later than 2009.
"We began aggressive actions in 2006 to restructure our automotive business so we can operate profitably at lower volumes and with a product mix that better reflects consumer demand for smaller, more fuel efficient vehicles," Ford chief executive, Alan Mulally, said.
"We fully recognise our business reality and are dealing with it. We have a plan and we are on track to deliver."
Mulally, is a former Boeing executive hired by Ford last September to turn the company around.
Ford stressed that outside the United States, its operations in South America and Europe were profitable last year.
The company said it had liquidation of $46 billion including arranged credit lines at the end of the year.
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