Ford reports $5.9 billion loss
The U.S. automaker says that, despite increasing losses, it doesn't expect to have to ask the government for an emergency loan.
NEW YORK (CNNMoney.com) -- Ford Motor reported that its ongoing losses soared in the fourth quarter, but the company reiterated it still does not need the federal bailout already received by its two U.S. rivals.
Ford reported a net loss of $5.9 billion, or $2.46 a share, up from a loss of $2.8 billion in the same quarter a year ago.
For the full year, Ford lost $14.6 billion, and the company has now lost nearly $30 billion over the past three years.
Excluding special items, losses were $3.3 billion, or $1.37 a share. Analysts surveyed by Thomson Reuters were forecasting a loss of $1.30 a share on this basis.
The company said it will burn through cash again this year, but added that it does not anticipate needing to receive federal help "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."
Instead, Ford said it will draw on its available credit lines to receive an additional $10.1 billion in cash on Feb. 3.
"Ford went to the credit markets two years ago when they were functioning normally and obtained the funding necessary - including our credit lines - to support our product transformation and restructuring," said Ford CEO Alan Mulally in a statement.
"Given the instability of the capital markets with the uncertain state of the global economy, we believe it is prudent to draw these credit facilities at this time," Mulally added.
Separately, the company's Ford Credit arm confirmed that it was eliminating 1,200 jobs, or about 20% of its staff, due to lower sales. In addition to suffering from weak demand for vehicles, Ford also sold its Jaguar, Land Rover and Mazda brands last year.
Ford's automotive operations reported a loss in every region but South America during the fourth quarter. Worldwide vehicle sales plunged 31% from a year ago, to 1.1 million. Total sales dropped 36%, to $29.2 billion, but they did top Wall Street's consensus estimate of $27 billion.
Ford signaled it is expecting continued weak sales in the first quarter, as it trimmed its first quarter production plans by 30,000 vehicles, 7% below its previous guidance. It will now make only 400,000 cars and trucks during the quarter, down 42% from what it made during the first three months of 2008.
David Cole, chairman of the Center for Automotive Research, a Michigan think tank, said the sharp cuts in production at Ford and elsewhere are signs of an important change in thinking in the U.S. auto industry that may allow them to ride out the current crisis.
"What we are seeing is a level of discipline to cut inventory that we have not seen before," said Cole. That could lead to higher prices for vehicles, as automakers no longer have to offer large cash-back offers and other inducements to move unsold vehicles.
"The quickest way to return to profitability is through reduced incentives," he said.
But Cole said that the outlook for sales remains grim for at least the next few months, and that the industry will need to see a second-half rebound if their turnaround plans are to be successful.
Ford's access to credit and cash on-hand puts it in a far better financial position than General Motors (GM, Fortune 500) and Chrysler LLC, who both needed loans from the federal government to avoid falling below the minimum cash level they needed to continue operations.
Ford had asked for a $9 billion line of credit from Congress at the same time GM and Chrysler were appealing for help last month. Congress did not approve such financial assistance, forcing the Treasury Department to step in and give the loans to GM and Chrysler late last year.
But the company did announce a slightly more conservative sales target for 2009. When it presented its turnaround plan to Congress in December, Ford said it expected 2009 U.S. industrywide sales of about 12.5 million vehicles, including medium- and heavy-duty trucks. On Thursday, the company said it now anticipates sales of between 11.5 million to 12.5 million vehicles this year.
"It's very volatile," said chief financial officer Lewis Booth when asked during a conference call about the change in sales guidance. Mulally added that January sales were shaping up to be as bad as December, when industrywide sales tumbled 36% from a year earlier.
Ford also said it is continuing to take steps to reduce costs.
The company announced it had reached an agreement with the United Auto Workers union to eliminate the jobs bank, which guarantees nearly full pay for UAW members who lose their jobs.
Ford said management and the union are working on details of implementing that agreement. GM announced a similar deal Wednesday, and there were reports Monday that Chrysler had also reached such a deal with the UAW.
Asked about other negotiations with the union or creditors to cut costs, Mulally said Ford is in ongoing talks with all major "stakeholders" of the company and that he was "very pleased by the response." But he would not give more details about those negotiations.