Ford losses continue with $5.8 billion in 3Q
Monday, October 23rd 2006, 8:51 am
By: News On 6
DEARBORN, Mich. (AP) _ Ford Motor Co. said Monday its loss widened to $5.8 billion in the third quarter, weighed down by the costs of its massive restructuring plan aimed at reshaping the company and cutting expenses so it can compete better against lower-cost rivals from overseas.
Ford's new Chief Executive, Alan Mulally, called the latest results ``clearly unacceptable.'' It was the largest quarterly loss for the nation's second biggest automaker in more than 14 years.
Ford also said it plans to restate its earnings for 2001 due to accounting errors involving derivative transactions. The restatement is expected to affect financial results from 2001 until the third quarter of this year.
The company expected the restatement would improve results for 2002, but said other periods are under study.
Ford's net loss of $3.08 per share for the July-September period was larger than last year's third-quarter loss of $284 million, or 15 cents per share.
Revenue fell 10 percent to $36.7 billion from the same period a year ago.
Excluding restructuring costs, the company said it lost $1.2 billion, or 62 cents per share, from continuing operations. Excluding special items in the third quarter of last year, Ford lost $191 million, or 10 cents per share.
Wall Street had been expecting a loss of 61 cents per share for the quarter, according to a survey of analysts by Thomson Financial.
Ford shares fell 15 cents to $7.86 in premarket trading.
``We are committed to dealing decisively with the fundamental business reality that customer demand is shifting to smaller, more efficient vehicles,'' Mulally said in a statement. ``Our focused priorities are to restructure aggressively to operate profitably at lower volumes, and to accelerate the development of new, more efficient vehicles that customers really want.
Dearborn-based Ford's turnaround plan aims to cut $5 billion in costs by the end of 2008 by slashing 10,000 white-collar workers and offering buyouts to all of its 75,000 unionized employees.
The loss including restructuring costs was Ford's largest quarterly loss since the first quarter of 1992, when the company lost $6.7 billion due mainly to accounting changes.
Excluding charges, Ford would have lost $2 billion on its North American automotive operations in the latest quarter. It blamed its decline in market share, intense competition, a drop in U.S. and European sales and a market shift away from its high-profit trucks and sport utility vehicles.
The company lost $1.2 billion in North America in the third quarter of last year.
Ford said special charges for the third quarter of 2006 totaled $5.26 billion before taxes. The charges included $2.2 billion to re-value assets in North America and $1.6 billion to decrease the value of Jaguar and Land Rover assets.
Ford also took at $861 million charge for jobs bank benefits and employee separations due to its plans to idle factories in North America, a $259 million charge for continued global personnel reduction and a $437 million charge for the cost of employee retirements that occurred earlier than planned.
The company also reported a $99 million gain due to the release of a reserve from excise taxes in South America due to a recent court ruling.