Ford Motor Company on Tuesday reported a net loss, including unusual items and results from discontinued operations, of $US980 million, or 55 cents per share, for full-year 2002.
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In 2001, Ford reported a net loss of $5.45 billion, or $3.02 per share.
Ford did, however, make an operating profit of $US872 million, or 47 cents per share, in 2002, excluding various charges, the sale of Kwik-Fit, restructuring actions and other unusual items not related to results from discontinued operations.
Revenue for 2002 was $162.6 billion, up about 1% from $160.8 billion a year ago. Vehicle unit sales were 6,980,000, compared with 7,008,000 in 2001.
“In the first year of our turnaround, Ford improved its operating results by about $1.7 billion,” said chairman and CEO Bill Ford. “Our earnings performance demonstrates that we are making solid progress toward the goals outlined in our revitalisation plan. In 2002, we exceeded nearly all our commitments and are on track to reach our mid-decade target of an annual $7 billion pre-tax operating profit.”
FOURTH QUARTER
Ford reported a net loss of $130 million, or 7 cents per share, for the fourth quarter of 2002, an improvement from 2001 of $4.9 billion ($2.74 per share).
Non-recurring restructuring costs arose primarily from the axing of 950 jobs at Jaguar, Land Rover and Volvo; Genk (Belgium) rationalisation and transfer of Transit production to Ford Otosan in Turkey and improvements in Cologne (Germany) as a result of restructuring die- casting and forging operations, and other manufacturing changes.
Total revenue in the fourth quarter was $41.6 billion, up $869 million from a year ago, despite a decline in the number of units sold. Worldwide vehicle unit sales fell slightly in the fourth quarter to 1,791,000 from 1,813,000 a year ago.
AUTOMOTIVE OPERATIONS
Ford’s worldwide automotive operations posted a loss of $539 million, compared with a loss of $1.96 billion in 2001. Worldwide automotive revenue was $134.4 billion, an increase of nearly 3% compared with a year ago.
In the fourth quarter, Ford’s worldwide automotive operations incurred a loss of $191 million on revenue of $34.7 billion, compared with a loss of $803 million on revenue of $33.6 billion in the fourth quarter of 2001.
North America: The loss in 2002 for Ford’s automotive operations in North America was $559 million on revenue of $94.1 billion. In 2001, those operations had a loss of $2.15 billion on revenue of $90.8 billion. The full- year improvement was primarily a result of the non-recurrence of costs associated with the customer safety initiative to replace Firestone tyres and the re-stocking of dealer inventories, which were well below an optimal level at the end of 2001.
In the fourth quarter, Ford’s North America automotive operations posted a loss of $124 million, compared with a loss of $916 million a year ago. The improvement reflected better cost performance, net revenue and mix, offset partially by lower volume. Revenue was $23.3 billion, compared with $23.2 billion in 2001.
Europe: In Europe, Ford’s automotive operations made only $12 million profit during full year 2002, compared with a profit of $266 million in 2001. Revenue was $32.1 billion, an increase from $31.9 billion a year ago.
Automotive operations in Europe incurred a loss of $139 million on revenue of $9.2 billion in the fourth quarter of 2002. This compares with a fourth quarter 2001 profit of $61 million on revenue of $8.5 billion. The decline in profit for both the fourth quarter and full year reflected a leaner product mix and lower dealer stocks, offset partially by higher market share.
South America: Ford automotive operations in South America incurred a loss of $296 million during full-year 2002, compared with the full-year loss of $225 million in 2001, more than explained by the effects of currency devaluation. Revenue was $1.6 billion, down from $2.2 billion in 2001.
Fourth quarter 2002 losses were $11 million on revenue of $354 million. This compares with a fourth quarter 2001 loss of $46 million on revenue of $466 million.
Rest-of-world: Ford’s automotive operations in the rest of the world earned a full-year profit in 2002 of $304 million, compared with $156 million in 2001. The improvement reflected better performance at Mazda and Ford’s Asia-Pacific operations. Revenue in 2002 was $6.6 billion, up $700 million from 2001.
In the fourth quarter of 2002, profits were $83 million, down from earnings of $98 million in 2001. Revenue was $1.8 billion compared to $1.5 billion during the same time period in 2001.
FORD CREDIT
Ford Motor Credit Company reported profits of $1.38 billion in 2002, up $175 million from a profit of $1.2 billion a year ago. Return on equity was 9% in 2002, compared with 7% in 2001. The increase in earnings reflected primarily a lower provision for credit losses, offset partially by the net unfavuorable impact of receivables sales and lower net financing margins. The provision for credit losses in 2002 was $3 billion, compared with $3.4 billion in 2001. At year end, the allowance for credit losses was $3.2 billion — 2.47 percent of end-of-period receivables.
In the fourth quarter of 2002, Ford Credit earned $382 million, up $376 million from the same period a year earlier. The improvement reflected a lower provision for credit losses and the net favorable impact of receivables sales, offset partially by lower net financing margins.
Ford Credit paid a dividend to Ford Motor Company of $700 million in December. For the full year, Ford Credit’s dividends, net of a January 2002 capital contribution, were $450 million.
HERTZ
Hertz reported full-year 2002 earnings of $127 million, up from $23 million in 2001. Hertz earned $16 million in the fourth quarter, compared to a loss of $58 million in the fourth quarter of 2001. The full-year and fourth-quarter improvements when compared to 2001 reflected increases in pricing and cost reductions.
OUTLOOK
“Although the outlook for the U.S. economy continues to be uncertain, we are looking for 2003 to be another good year for car and truck sales,” said Ford vice chairman and chief financial officer Allan Gilmour.
Ford is estimating that industry demand will be about 16.5 million vehicles in the US Its North American production plans call for producing 1,035,000 cars and trucks in the first quarter — up 25,000 units from production plans released earlier this month.
