Ford enters profit territory

FORD Australia’s top-selling Territory four-wheel drive wagon has helped drive the company to an after-tax profit of $185.6 million for calendar year 2004.

The profit is its best since 1996 and represents a 20 per cent improvement over 2003.

Ford Australia president Tom Gorman said the strong result would allow Ford Australia to continue to reinvest in new model lines, investigate new technologies and product initiatives, and to further streamline its manufacturing processes.

He said the reinvestment would be "vital to the future development of our business as the Australian automotive market continues to become more competitive".

"We will continue our emphasis on developing quality vehicles that meet market demand, utilising our manufacturing plants to their best capacity, and reducing cost in our business," he said.

Ford Australia’s net sales revenue for 2004 was $4.1 billion, an increase of 5.6 per cent over the record $3.9 billion in sales posted in 2003.

The strong profit result was driven by total sales of 135,172 vehicles, a 6.8 per cent increase above 2003 levels.

Mr Gorman said the profit result reflects the company’s strong performance during 2004, amid the increased competitiveness of a booming Australian car industry.

"We recorded our best retail sales performance in almost a decade, which resulted in a total year market share of 14.2 per cent, up 0.3 points over the prior year," he said, adding that 2004 was the second year in a row of market share growth for the company.

Mr Gorman credited the Territory’s overwhelming market acceptance, which saw it achieve segment leadership and the title of top-selling 4WD for six consecutive months in 2004, as the primary driver behind the sales increase.

"That trend has continued into 2005 with Territory remaining sales leader in both the SUV medium segment and the overall SUV sector, outselling its nearest competitor by 45 per cent or almost 2500 vehicles," he said.

Apart from the Territory, Ford also launched the 1.6-litre Fiesta light car. It recorded 3930 sales in just 10 months – a four-year high for a Ford model in that class.

Although Australia’s traditional large car segment continued its share of market decline during 2004, the arrival of the Territory helped offset the reduction in Falcon sales.

"Ford’s Falcon Ute and imported commercial vehicle line-up have continued their strong presence in the light commercial vehicle sector, increasing sales by almost 1000 vehicles on the previous year," Mr Gorman said.

The Courier achieved its best result on record, while the Falcon Ute finished just shy of its all-time record with more than 20,000 sales.

In total, Ford sold a total of 101,279 locally produced vehicles during 2004.

"This represents a 5.7 per cent increase over 2003, which has our manufacturing plants continuing to operate at full capacity," Mr Gorman said.

Ford Australia Production Figures – 2004

Falcon 71,618*
Territory 18,266
Falcon Ute 21,127
Total 111,011*
Falcon production includes sedan, wagon, Fairlane and LTD derivatives. Total production includes export volume of 8348 vehicles.

Blue Oval's debt rating takes a beating

INTERNATIONAL investor services company Moody’s has downgraded the Ford Motor Company’s long-term debt rating to its lowest investment-grade level, one grade above "junk" status.

Moody’s said the downgrade reflected Ford’s problems with its pension funds, struggling market share in the United States and the fact it would not achieve expected earnings of $US4 billion this year.

The Moody’s downgrade comes a week after fellow ratings agency Standard & Poor’s slapped a "junk bond" status on both Ford and General Motors.

Moody’s has warned Ford that if its situation worsens over the next 12 to 18 months, a move to junk status could result. It said Ford faces a big challenge in sustaining market share as consumers across the US move away from Ford’s pickup trucks and SUVs, long the cornerstone of profitability for the vehicle maker.

Ford’s F-Series trucks are consistent bestsellers for the brand in the US and America’s biggest-selling vehicle for 22 years.

"While we're disappointed, we appreciate that Moody's recognizes there has been significant progress at Ford Motor Company," Ford’s chief financial officer Don Leclair said in a statement.

"We also see the challenges they’ve cited and are committed to overcoming them through the acceleration of our business plan.

"This will include strengthening our balance sheet, optimising our global footprint, achieving more cost savings and introducing new products that appeal to consumers around the world."