With vehicle sales and revenue crashing in all its markets worldwide, Ford Motor Co. on Thursday reported a worse-than-expected $5.9-billion loss for the fourth quarter but continued to insist that it could operate without help from Washington.
In the face of what the automaker's chief executive, Alan Mulally, called "unprecedented challenges" that had "shaken the foundations of the industry," Ford lost $14.6 billion for all of 2008, its worst full-year results.
Nevertheless, Mulally said the company would not require government aid, unlike rivals General Motors Corp. and Chrysler, which have been lent $17.4 billion by the federal government.
Ford did leave open the possibility of seeking a bailout should market conditions further deteriorate.
The automaker also said that it would draw down remaining credit lines worth $10.1 billion but added that the funds were not immediately necessary and that it would keep the cash on hand as a financial security blanket.
The company's poor showing raises fresh questions about how long it can continue in the most bearish automobile market in a quarter of a century without outside help.
On a per-share basis, Ford lost $2.46 in the fourth quarter, compared with a $1.33-a-share loss in the fourth quarter of 2007 (when Ford reported a net loss of $2.8 billion). And for the full year, Ford lost $6.41 a share, compared with $1.35 a share in 2007 (when it lost $2.7 billion).
Analysts had expected Ford to lose $3.5 billion in the fourth quarter, or $1.34 a share. Ford stock fell 8 cents to $1.95 on the news.
In the U.S., its most important market, Ford's sales were down 20% last year, worse than the industry as a whole.
And with its sales volume down in every other global market, the carmaker continued to deplete its cash stores through the end of the year despite significant cost and production reduction efforts and major asset sales, including most of the company's stake in Mazda Motor Corp.
Revenue in the fourth quarter was $29.2 billion, a 36% decline from the previous year, and for all of last year, Ford's sales were $139.3 billion, down 20% from 2007's total of $173.9 billion.
Because of the sales free fall, Ford has been forced to use its cash reserves to continue operations. The hemorrhaging peaked in the third quarter, when Ford depleted cash reserves by $7.7 billion.
In the fourth quarter, Ford checked that slightly, burning $5.5 billion and finishing the year with $13.4 billion in cash on hand, scarcely a third of its total at the end of 2007. Including available credit and other resources, Ford ended last year with $24 billion of available liquidity, compared with $25.8 billion in debt.
To ensure its dwindling cash is sufficient, Ford has been making deep cost cuts. The company already has reduced its U.S. workforce by more than one-third in the last two years and plans to reduce costs by $4 billion in 2009.
It will do that in part by reducing production -- already down 40% in the current quarter compared with a year earlier -- and also with job cuts. This week, Ford announced it would cut 1,200 jobs from its lending arm, Ford Credit, and 1,500 more with the elimination of the jobs bank it maintained under terms of its contract with the United Auto Workers union.
The company said Thursday that the UAW had agreed to the elimination of that program, as it had for GM and Chrysler last week.
Ford has other problems looming.
Visteon Corp., which was spun off from the company in 2000 and is its second-largest provider of parts, hired bankruptcy attorneys this week after its shares dropped to just 15 cents. Ford said it had no plans to provide liquidity relief to the supplier, as GM has with Delphi, its ailing former parts unit.
Ford executives said Thursday that they expected total industry sales in the U.S. to fall to a range of 11.5 million to 12.5 million cars and light trucks in 2009, a big drop from last year's total of 13.3 million units. But that's a more optimistic outlook than the one given by a variety of industry analysts and GM, which this month forecast a 10.5-million sales total for this year.
"We expect something of a recovery in the second half of 2009," Ford Chief Financial Officer Lewis Booth said.