Ford Motor Co. announced plans to accelerate its vast restructuring plan Thursday after the sputtering auto giant posted its worst quarterly loss in history.
The 8.7-billion-dollar loss in the second quarter was largely due to hefty charges as Ford wrote down the value of its assets and recognized losses from auto leasing.
Excluding special charges, the operating loss was 1.0 billion dollars for the second-largest US automaker, or 64 cents per share, far steeper than Wall Street estimates of a loss of 27 cents a share.
Investors punished Ford, pushing shares down 15.5 percent to 5.11 dollars.
The automaker has now lost nearly 24 billion dollars since 2006 and recently backed off plans to return to profitability by 2009 as high fuel prices and a weak US economy have substantially cut demand in its home market.
Ford's US sales fell 28 percent in the first six months of the year while overall sales were down 16 percent.
Ford officials warned that 2008 could be worse than 2007 and does not expect the US market to improve significantly until 2010.
“The last quarter has certainly been a challenging one for the entire automobile industry,” Ford president and chief executive Alan Mulally said in a conference call.
“We also believe we're uniquely positioned to respond to the new environment in which we expect to operate in the years ahead.”
This latest revision to Ford's restructuring plan includes a small-car and fuel-efficiency offensive in reaction to what the automaker considers a permanent shift away from gasoline-guzzling pickup trucks and large sport utility vehicles (SUVs).
Ford also will accelerate plans to streamline its global operations and will reduce the number of vehicle platforms it offers to nine from 25, Mulally said.
“We continue to take fast and decisive action implementing our plan and responding to the rapidly changing business environment,” he said.
“Our European and South American operations are robust and profitable. We have momentum in Asia. And we are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America.”
Despite major cost cutting, Ford's North American automotive operations reported a pre-tax quarterly loss of 1.3 billion dollars as revenues fell to 14.2 billion dollars from 19 billion dollars in the second quarter of 2007.
The company said as part of its realignments, it will continue to offer “targeted hourly buyouts” in coordination with union contracts “to secure competitive employment levels.”
Ford also said it remains on track to reduce costs for white-collar jobs by 15 percent in North America by August 1 and had eliminated another 4,000 union jobs through buyouts in the second quarter.
Ford's second-quarter revenue was 38.6 billion dollars, down from 44.2 billion a year ago before the company sold its Jaguar, Land Rover and Aston Martin nameplates.
Special charges include a write-off of 5.3 billion dollars for Ford's North American assets and 2.1 billion dollars for Ford credit.
Ford said it was speeding up its reorganization in North America “because of deteriorating economic conditions” that have hurt demand for cars and due to “a significant shift” away from large pickup trucks and traditional SUVs.
Ford posted profit of 582 million dollars in Europe and 388 million in South America.
In addition to bringing six small vehicles to North America from its European lineup, Ford is speeding up plans for its EcoBoost turbocharged engine and new four-cylinder engines that deliver better fuel economy.
It is also boosting hybrid production and converting three truck and SUV plants to small-car production, beginning in December.
The automaker said it is confident it has sufficient cash reserves to carry it through the downturn.
“When we laid out the original pan and the financing of the plan we stress-tested the business environment pretty highly,” Mulally said.
“We have sufficient liquidity going forward.”
