Ford (F)
Posted: Fri Nov 07, 2008 11:35 pmFord posts $3B operating loss
Automaker announces further job cuts, other cost savings as it tries to stem losses.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 7, 2008: 8:10 AM ET
NEW YORK (CNNMoney.com) -- Ford Motor reported a $3 billion operating loss in the latest quarter, and said Friday it would reduce staff and capital spending in order to preserve its dwindling cash.
Ford said it would cut salaried employment costs by 10% - reducing compensation of its white collar workers by eliminating merit pay, bonuses and the company's matching contributions to their retirement accounts.
But even with those savings, the company said it's likely to reduce staffing levels for its salaried staff. It also said hourly staff - mostly factory workers covered by union contracts - would be reduced by an additional 2,600 through a voluntary buyout package.
The company, which earlier this year sold brands such as Jaguar and Land Rover, said it would continue to look to sell assets.
Ford's loss came to $1.31 a share, excluding special items, far worse than the penny a share loss it reported on that basis a year earlier. Analysts surveyed by earnings tracker Thomson Reuters had forecast a loss of 93 cents a share.
The company had a one-time gain of $2.2 billion, related to the accounting of its retiree health care expenses. With that gain, it reported a net loss of $129 million, or 6 cents a share, an improvement from the $380 million, or 19 cents a share, it lost on that basis a year earlier.
But the operating losses continued to burn through the company's cash position, leaving with its auto operations with only $18.9 billion in cash on hand at the end of the quarter, down $6.3 billion from the start of the quarter.
There has been growing concern that the nation's automakers could run out of cash as soon as next year due to rising losses and high borrowing costs faced by the companies. Ford had been considered to be in the best cash position of the three U.S.-based automakers.
Ford, which saw the volume of its U.S. vehicle sales plunge 25% in the quarter, reported that overall revenue tumbled by $9 billion in the quarter to $32.1 billion. High gasoline prices at the start of the quarter, followed by tight credit, increased job losses and record lows for consumer confidence late in the quarter combined to keep potential auto buyers on the sidelines.
Ford also announced it would seek to raise additional cash by using equity-for-debt swaps. But the company's stock has already lost about three-quarters of its value in the last 12 months. Automotive investor Kirk Kerkorian, who invested just over $1 billion in Ford shares earlier this year, has started selling that stake at a large loss and has said he may get out of the company's stock altogether.
Ford (F, Fortune 500) is not the only automaker seeing trouble. Rival General Motors (GM, Fortune 500) is forecast to report a jump in losses in the quarter later in the day Friday. On Thursday, Japanese rival Toyota Motor (TM), which is poised to see its first annual decline in U.S. auto sales, slashed its earnings outlook for its current fiscal year.
The chief executives of GM, Ford and privately-held Chrysler LLC, as well as the president of the United Auto Workers union, met with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid on Thursday to seek support for a wide-ranging bailout package for the industry. Both leaders voiced support for additional help for the sector following their meetings.
Among the topics discussed were a $25 billion loan to fund union-controlled trust funds that would be set up in the coming year to cover the health care costs of retirees and their family members. Shifting about $100 billion of those costs from the automakers' balance sheet to the trust funds was a key concession the companies won from the UAW in the 2007 labor deals.
The discussions also touched upon allowing the automakers to tap into the $700 billion bailout of Wall Street firms and the nation's banks that was passed by Congress last month. Treasury has so far rejected auto-industry inquiries about accessing that pool of money.
The automakers also renewed their pre-election request to double the $25 billion low-interest loan program approved by Congress, as part of energy legislation, to help automakers convert to making more fuel-efficient vehicles in an effort to meet the demands of car buyers and new federal rules.
First Published: November 7, 2008: 7:26 AM ET
Automaker announces further job cuts, other cost savings as it tries to stem losses.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 7, 2008: 8:10 AM ET
NEW YORK (CNNMoney.com) -- Ford Motor reported a $3 billion operating loss in the latest quarter, and said Friday it would reduce staff and capital spending in order to preserve its dwindling cash.
Ford said it would cut salaried employment costs by 10% - reducing compensation of its white collar workers by eliminating merit pay, bonuses and the company's matching contributions to their retirement accounts.
But even with those savings, the company said it's likely to reduce staffing levels for its salaried staff. It also said hourly staff - mostly factory workers covered by union contracts - would be reduced by an additional 2,600 through a voluntary buyout package.
The company, which earlier this year sold brands such as Jaguar and Land Rover, said it would continue to look to sell assets.
Ford's loss came to $1.31 a share, excluding special items, far worse than the penny a share loss it reported on that basis a year earlier. Analysts surveyed by earnings tracker Thomson Reuters had forecast a loss of 93 cents a share.
The company had a one-time gain of $2.2 billion, related to the accounting of its retiree health care expenses. With that gain, it reported a net loss of $129 million, or 6 cents a share, an improvement from the $380 million, or 19 cents a share, it lost on that basis a year earlier.
But the operating losses continued to burn through the company's cash position, leaving with its auto operations with only $18.9 billion in cash on hand at the end of the quarter, down $6.3 billion from the start of the quarter.
There has been growing concern that the nation's automakers could run out of cash as soon as next year due to rising losses and high borrowing costs faced by the companies. Ford had been considered to be in the best cash position of the three U.S.-based automakers.
Ford, which saw the volume of its U.S. vehicle sales plunge 25% in the quarter, reported that overall revenue tumbled by $9 billion in the quarter to $32.1 billion. High gasoline prices at the start of the quarter, followed by tight credit, increased job losses and record lows for consumer confidence late in the quarter combined to keep potential auto buyers on the sidelines.
Ford also announced it would seek to raise additional cash by using equity-for-debt swaps. But the company's stock has already lost about three-quarters of its value in the last 12 months. Automotive investor Kirk Kerkorian, who invested just over $1 billion in Ford shares earlier this year, has started selling that stake at a large loss and has said he may get out of the company's stock altogether.
Ford (F, Fortune 500) is not the only automaker seeing trouble. Rival General Motors (GM, Fortune 500) is forecast to report a jump in losses in the quarter later in the day Friday. On Thursday, Japanese rival Toyota Motor (TM), which is poised to see its first annual decline in U.S. auto sales, slashed its earnings outlook for its current fiscal year.
The chief executives of GM, Ford and privately-held Chrysler LLC, as well as the president of the United Auto Workers union, met with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid on Thursday to seek support for a wide-ranging bailout package for the industry. Both leaders voiced support for additional help for the sector following their meetings.
Among the topics discussed were a $25 billion loan to fund union-controlled trust funds that would be set up in the coming year to cover the health care costs of retirees and their family members. Shifting about $100 billion of those costs from the automakers' balance sheet to the trust funds was a key concession the companies won from the UAW in the 2007 labor deals.
The discussions also touched upon allowing the automakers to tap into the $700 billion bailout of Wall Street firms and the nation's banks that was passed by Congress last month. Treasury has so far rejected auto-industry inquiries about accessing that pool of money.
The automakers also renewed their pre-election request to double the $25 billion low-interest loan program approved by Congress, as part of energy legislation, to help automakers convert to making more fuel-efficient vehicles in an effort to meet the demands of car buyers and new federal rules.
First Published: November 7, 2008: 7:26 AM ET
