The Ford Motor Company revealed a dismal third-quarter net loss of $5.8bn (£3.1bn) yesterday and cast blame partly on one-time charges related to its latest job-cutting campaign as well as on write-downs of assets, notably at its British prestige-car units, Jaguar and Land Rover.
It was the worst single-quarter loss suffered for 14 years by Ford, which remains the second largest car maker in the United States. It also included a pre-tax loss on ongoing operations in North America of $1.98bn, which is overwhelming any profits elsewhere in the company. The company also said it planned to restate results going back to 2001 to correct accounting of derivative transactions.
The report exposes the drag still being exerted on Ford by both of its main British properties, for which the company took a pre-tax charge of $1.6bn. Jaguar, in the midst of a restructuring that started in 2004, is still making losses.
Alan Mulally, Ford's recently appointed chief executive, said he had not yet decided whether to keep the Premier Automotive Group, which houses Jaguar and Land Rover as well as Volvo. "I really think it's going to hinge on how the businesses are doing and can we make profitable growth businesses out of them with the action we have taken and additional actions that might be required," he said during a conference call yesterday.
Pre-tax losses at PAG, excluding the one-off items, widened to $593m in the third quarter from $108m a year ago. Sales volumes fell for all the brands in PAG, apart from Aston Martin, which was put on the block earlier this summer.
Ford's chief financial officer, Don Leclair, said yesterday that the car maker had received "many, many" inquiries from potential buyers for Aston Martin, but added that he did not expect to complete any sale of the marque this year.
There was some slight improvement in Ford's European operations as a whole, however, where losses in the third quarter fell to $13m compared to $55m in the third quarter of 2005.
But the worst of Ford's problems still lie in North America, where increased petrol prices this year helped accelerate a consumer stampede away from its larger models: SUVs and pick-up trucks. The company has suffered an 8.6 per cent decline in car sales in the US this year. The quarterly write-downs of assets in North America were $2.2bn.
There were also large charges associated with Ford's latest global restructuring plan, which includes a buyout offer for all of its unionised workers in the US, where it expects to shed as many as 45,000 jobs and shut 16 plants. In addition, it intends to strip away 10,000 of its white-collar positions. William Clay Ford, the company's chairman, recently surrendered his role as chief executive to Mr Mulally, a former top executive at Boeing. Mr Mulally inherited the restructuring plan set in motion by Mr Ford and has so far made no major changes of his own.
"These business results are clearly unacceptable," Mr Mulally said. "Our focused priorities are to restructure aggressively to operate profitably at lower volumes, and to accelerate the development of new, more fuel-efficient vehicles that customers really want."
The overall quarterly loss translated into $3.08 a share. Setting aside write-downs and one-time charges, the company showed a quarterly operating loss of $1.2bn or 62 cents a share, which was roughly in line with expectations on Wall Street.Reuse content