News - Ford
Ford Australia reports $23.7m loss
Blue Oval still in red with manufacturing exit costs but positive signs ahead
9 May 2017
By IAN PORTER
FORD Australia has reported a much-improved loss of $23.7 million for 2016 thanks to the continued success of its locally developed Ranger utility and the first full year of the Mustang sportscar and Ranger-based Everest SUV.
The result was a marked improvement over the loss of $162.25 million posted for 2015 and was achieved thanks to a strong rise in revenues to $3.58 billion – up 30 per cent.
Contributing to the result was taxpayer funding of $40.9 million – labelled “government grants receipts” in the accounts – with $15 million of this received through the federal Automotive Transformation Scheme (ATS).
Directors said the latest result was again affected by the costs of closing the manufacturing operations, which ceased in October last year.
Decommissioning costs and the expense associated with retrenching a large proportion of the company’s workforce masked the improvement achieved on the dealer forecourt, which in sales terms saw the Blue Oval brand’s volume rise 15.3 per cent last year.
“We expect the company to incur decommissioning-related expenses for the foreseeable future which could be material, while our vehicle, parts and accessories sales division, along with engineering and design services, are anticipated to be profitable,” Ford Australia president and CEO Graeme Whickman said in the annual report.
Communications and public affairs director Martin Gunsberg said the 2016 accounts reflected the progress Ford has made in its quest to transform and grow its business into the future.
“The result reflects the significant growth achieved in our core business as we move towards sustainability,” he said.
Directors now hope to consolidate the market share gains achieved in 2016, when Ford managed to stop some of the erosion with a 6.9 per cent share of the Australian new-vehicle market – a far cry from past years, but up from the 6.1 per cent low-point recorded in 2015.
The company is confident it can achieve sales in 2017 similar to those seen in 2016, with its performance to the end of April showing a 4.9 per cent slip compared to the same period last year.
Mr Gunsberg said the national sales company – separate from the manufacturing operations – was “absolutely” profitable in 2016.
GM Holden last week revealed a 19.2 per cent jump in earnings to $152.8 million for 2016.
This mainly comprised earnings from the company’s manufacturing operations which were inflated by the absence of depreciation charges. Most of the manufacturing assets were written off in 2013 when the company posted a massive loss of $553 million.
Holden also received federal government assistance under the ATS of $51.4 million.
Ford took some major steps forward in the showroom battle during 2016 thanks to the first full year of the Mustang and Everest and another boom year for Ranger.
With 81,207 new Ford vehicles registered last year, the brand jumped back into fifth place overall, leaping over Mitsubishi and closing the gap between itself and fourth-placed Holden from 32,000 units in 2015 to 13,000.
The Thailand-sourced Ranger was far and away the best seller, with a total of 36,934 sold (previously 29,185).
The second-best seller for Ford behind the Ranger was the home-grown Territory SUV, even though sales dropped 22 per cent to 6928 units. This was still enough to keep the Focus in third place with 6783 units (down 4.6 per cent).
As might be expected, judging from the waiting list, the Mustang made a big impression in its first full year on the market. Mustang sales rocketed from a negligible 121 in 2015 to 6208 units last year. That growth could have been even higher if supplies were not limited.
The lift in Ford sales was much greater than the 2.0 per cent rise achieved by the market overall, which peaked at a new record of 1.18 million cars and trucks.
Mr Gunsberg said the strong Ranger sales followed the introduction of the PX Series II models and the addition of the Sync 3 infotainment system.
“We are seeing consistently increased numbers year on year, indicating that the Ranger is meeting customers’ needs in Australia,” he said.
Mr Gunsberg confirmed that supplies of the Mustang were still constrained by demand for the popular model in other markets and that the waiting list still stretched past mid-year.
“But it is getting better. At least people are not waiting a year anymore,” he said.
The latest loss has brought Ford Australia’s accumulated losses to $908 million, almost double the shareholders’ funds of $454 million.
Mr Whickman said in the directors’ report there were “reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable”.
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