Ford loses $2.9 billion on automotive operations in third quarter
The company posts a net loss of $129 million, which is smaller than its loss for the same quarter last year. But sales fall 22% in the quarter, and the automaker will make more job cuts.
Struggling Ford Motor Co. today posted a narrower net loss for the third quarter, but said it lost $2.9 billion on automotive operations during the period as demand for its vehicles collapsed.
The No. 2 U.S. automaker also said it would make further cuts in its white-collar worker ranks in an attempt to further reduce expenses as it burns through cash at an accelerating pace.
Ford reported a net loss of $129 million, or 6 cents a share, for three months ended Sept. 30, compared with a net loss of $380 million, or 19 cents a share, for the same period a year ago.
Sales plunged 22% to $32.1 billion, reflecting the sharp decline in global auto markets as well as the sale of Ford's Land Rover and Jaguar units. Ford's U.S. sales are down more than 18% this year amid the worst market for auto sales in the U.S. since 1991, and the decline is worsening, with Ford's sales plummeting almost 32% last month.
The loss from operations, which included a $2.6-billion loss on North American operations, was largely offset by a gain from the company's shifting of retiree healthcare liabilities to a trust run by the United Auto Workers.
The operating loss of $1.31 a share was bigger than the 93-cent loss Wall Street was expecting.
Chief Executive Alan Mulally said Ford remains committed to its turnaround plan of cutting costs while it retools to produce a lineup featuring more small and medium-size cars and fewer gas-guzzling trucks and SUVs.
But he conceded that the global downturn in the auto industry has been "deeper and longer than previously expected"
"Businesses around the world are facing enormous challenges and Ford is no exception," he said in a conference call this morning.
Although the company didn't provide specific guidance, Mulally said "we anticipate that [industry conditions in] 2009 will be no better than 2008, with a recovery happening in 2010."
The steep drop in sales, combined with a sharp drop in truck production as the company geared up for release of its new generation of F-series pickups, contributed to the $7.7 billion in negative cash flow for the quarter. The company burned through $2.1 billion in cash in the second quarter.
Investors have been keeping a close eye on Ford's cash position. As the auto industry has cratered and stock prices of U.S. auto companies have plummeted -- Ford's stock closed at $1.98 a share Thursday -- speculation has swirled around the long-term viability of Ford and its American competitors, General Motors and Chrysler.
