Ford Motor Co. announced Thursday a quarterly loss of 5.9 billion dollars, capping a nightmarish year, but said it had “sufficient liquidity” to fund its turnaround plan without US government aid.
The number two US automaker's results showed a sharp widening of its losses as auto sales were slammed in the fourth quarter by a deep economic crisis and credit squeeze.
But Ford said that unlike rivals GM and Chrysler, it had enough cash to keep operating as it executes a restructuring plan.
“Based on current planning assumptions, it does not need a bridge loan from the US government, barring a significantly deeper economic downturn or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company's supply base, dealers or creditors,” Ford said in a statement.
Ford's loss in the fourth quarter was more than double the deficit in the same period in 2007 of 2.8 billion dollars. Revenues plunged some 33 percent to 29.2 billion dollars in the period, amid weak sales and the divesting of its Jaguar division.
For all of 2008, Ford posted a whopping loss of 14.57 billion dollars, compared with a 2.7 billion dollar loss in all of 2007.
Revenues for the year fell to 146 billion dollars from 172 billion.
“Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results,” said Ford president and chief executive Alan Mulally.
“We continued to take the decisive actions necessary to lower production to match the lower worldwide demand and reduce costs, which we expect will allow us to significantly reduce negative operating cash flow in 2009 and position Ford for growth when the economy rebounds.”
The Detroit giant said it “has sufficient liquidity to fund its business plan and product investments.”
Ford said it finished 2008 with 24 billion dollars in available liquidity for its auto operations including 13.4 billion dollars in cash.
The iconic US automaker has shed thousands of jobs and closed plants in an effort to cut costs, and sold off its Premier Automotive Group that included Jaguar.
Thursday, Ford said it would cut 1,200 jobs at its Ford Motor Credit unit in response to weak conditions.
The announcements by Ford comes with the US automotive sector on the brink.
Ford's cash-strapped competitors GM and Chrysler were granted 13.4 billion dollars in government loans in order to keep their operations going amid the sudden downturn. After initially requesting a nine billion dollar line of credit, Ford later told Congress it had sufficient cash on hand to get through the sales slump.
GM and Chrysler must submit a detailed restructuring plan by February 17 and a yet to be appointed “car czar” must certify by March 31 that they are making progress in carrying out the plans.
US auto sales fell 18 percent last year to their lowest level since 1992 and are forecast to fall by up to three million vehicles this year to between 10.5 and 12 million units.
Sales have hovered between 16 and 17 million vehicles for the past decade and have not been below 12 million since the recession of 1982 when the United States had 74 million fewer people than today.
Yet Ford is basing is plans on US total industry sales of 13.5 million vehicles, which would represent a drop from 2008 levels but a rebound from weak sales pace of the final months of the year.
