Ford Motor Company on Thursday reported a 2007 full-year net loss of $2.7bn ($1.35 per share), a significant improvement compared with the 2006 full-year net loss of $12.6 bn ($6.72 per share).
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Revenue, excluding special items, rose to $173.9bn from $160.1bn a year ago. The increase was due primarily to changes in exchange rates, higher net pricing and improved product mix, the automaker said.
Including taxes, Ford’s full-year loss from continuing operations was $366m, (19 cents per share) compared with a 2006 loss of $2.7bn ($1.44 per share).
Excluding special items, full-year pre-tax profit from continuing operations was $126m, up $3.3bn from a year ago.
Ford said that all automotive operations outside North America were profitable for the full-year, at least before special items, and all automotive operations “achieved significant improvements when compared with 2006”.
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By GlobalDataSpecial items, primarily non-cash charges associated with a Premier Automotive Group (PAG) asset impairment (related to Volvo) and a change in business practice for providing retail incentives to dealers throughout the year, reduced full-year pre-tax results by $3.9bn ($1.18 per share), which included a reduction in revenue of $1.4bn.
“Each of our automotive operations is improving, and we are encouraged by the progress, which validates our strategy and plan,” said Ford president and CEO Alan Mulally.
Q4
Ford posted a 2007 fourth-quarter net loss of $2.8bn ($1.30 per share), a big improvement on the $5.6bn ($2.98 per share) lost in the same period of 2006.
Fourth-quarter pre-tax loss was $620m, an improvement of $1.3bn.
Fourth-quarter revenue, excluding special items, was $45.5bn, up from $40.3bn a year ago, due mainly to currency exchange gains, higher net pricing, and improved volume.
Ford’s fourth-quarter after-tax loss from continuing operations, excluding special items, was $429m (20 cents per share compared with a 2006 after-tax loss of $2bn ($1.03 per share).
As with the full year results, special items reduced Q4 pre-tax results – in this case by $3.9bn ($1.10 per share), which included a revenue reduction of $1.4bn. Again, as for the full year, these were primarily non-cash charges associated with a PAG asset impairment (related to Volvo) and a change in retail incentive provisions for dealers.
Automotive
For the full year, Ford’s worldwide automotive sector reported a pre-tax loss of $1.1bn, compared with a pre-tax loss of $5.1bn a year ago. The automaker said the improvements primarily reflected higher net pricing, lower costs, and favourable model mix, partially offset by unfavourable changes in currency exchange rates, and higher net interest expenses.
Automotive posted a pre-tax loss of $889m for the fourth quarter, compared with a pre-tax loss of $2.3bn a year ago.
Worldwide automotive revenue for 2007 was $155.8bn, compared with $143.3bn a year ago. Q4 revenue was $40.8bn, up from $36.0bn.
Total company vehicle wholesales in 2007 were 6,553,000, compared with 6,597,000 units in 2006. Fourth-quarter vehicle wholesales were 1,643,000, up from 1,568,000.
North America automotive operations reported a full-year pre-tax loss of $3.5bn, compared to a loss of $6.0bn in 2006. Revenue was $70.5bn, up from $69.4bn.
The Q4 pre-tax loss of $1.6bn was an improvement on the $2.7bn lost a year ago. Revenue was $17.0bn, up from $15.1bn.
South American and Ford Europe operations both reported substantial improvements in pre-tax profit for the full year while the Premier Automotive Group (PAG) posted a full-year pre-tax profit of $504m, compared with a loss of $344m a year ago.
“The improvement was more than explained by cost reductions across all brands, volume growth, and higher net pricing at Land Rover, partially offset by unfavourable changes in currency exchange rates and adverse mix,” Ford said in a statement.
Volvo incurred an unspecificed loss for the full year. Full-year revenue for PAG was $33.2bn, compared with $30.0bn in 2006.
PAG reported a Q4 profit of $59m, compared with $174m in the same period a year ago, which the automaker said, “was more than explained by Volvo, primarily reflecting adverse currency exchange rates, product mix, and the non-repeat of one-time profit impacts included in 2006 results”.
Within PAG, Volvo was break-even, with the combined Jaguar and Land Rover operations accounting for the profit. PAG revenue for the quarter was $9.0bn, compared with $8.6bn a year ago.
Asia Pacific and Africa operations improved greatly over the full year, posting a pre-tax profit of $40m, compared with a pre-tax loss of $185m a year ago.
“[This] primarily reflected favourable cost performance and net revenue, and higher profits from our Chinese joint ventures, partially offset by adverse mix and exchange,” Ford said. Full-year revenue was $7.0bn, compared with $6.5bn in 2006.
Ford earned $204m from Mazda and associated operations, compared with $168m in 2006.
However, ‘other automotive’, which consists of interest and financing-related costs, accounted for a full-year pre-tax loss of $547m, compared with a pre-tax profit of $247m in 2006.
Ford said the fall was due mainly to the non-recurrence of last year’s tax-related interest income of about $670m, and higher net interest expense associated with financing implemented during the fourth quarter of 2006.
For the full year, the financial services sector earned a pre-tax profit of $1.2bn, compared with a pre-tax profit of $2.0bn in 2006.
Ford Motor Credit reported net income of $775m in 2007, down from earnings of $1.3bn a year ago. Pre-tax earnings were $1.2bn in 2007, down $738m from 2006.
Ford said the fall was due to the non-recurrence of credit loss reserve reductions, higher borrowing costs, higher depreciation expense for leased vehicles and higher costs due to changes being made in the North American business.
Outlook
“Although our automotive operations are improving on a year-over-year basis, the US economy is slowing and the outlook for the auto industry remains challenging,” said Mulally.
“To help ensure we are able to deliver our commitments despite the difficult external environment, we will be taking further cost reduction actions in North America, including enterprise-wide UAW buyouts.
“In addition, we will continue to accelerate the flow of new products, reduce vehicle complexity, and adjust production to the changing business environment.”
Reports in the US this week said Ford, under its recent agreement with the UAW, planned to axe 13,000 more jobs in North America.
