Ford on Thursday (20 July) reported a net loss of US7 cents per share, or $123m, for the second quarter of 2006, down considerably on the 47 cents a share, or $946m, net income in Q2 2005.
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The Q2 loss from continuing operations, excluding special items, was 3 cents per share, or $48m, compared with 47 cents per share, or $936m, profit a year ago.
Sales and revenue was $42bn, down $2.5bn.
“We’ve seen an improvement in North America results in the second quarter, but the external factors we face aren’t going to get any easier,” noted Ford’s chairman and CEO Bill Ford.
“Mark Fields [executive vice president and president – The Americas] and his team have been working on plans to accelerate their efforts. Within the next 60 days, we’ll be in a position to discuss the additional actions we will be taking.”
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By GlobalDataSpecial items reduced earnings by 4 cents per share in the second quarter. These included charges or gains on various plant closure activities and a gain from Mazda pension liability transactions in Japan.
Ford said bright spots in the second quarter included continued strong year-to-date sales growth in major international markets, including a 100% increase in China and a 75% increase in India.
On a pre-tax basis, Ford’s worldwide automotive sector losses in the second quarter were $808m, up from $245m a year ago.
Worldwide automotive sales declined to $37.7bn from $38.7bn in the same period last year. Worldwide vehicle unit sales in the quarter were 1,732,000, up from 1,718,000.
The Americas reported a pre-tax loss of $702m, a slight improvement on the pre-tax loss of $819m a year ago.
North America automotive operations reduced pre-tax loss slightly to $797m from $907m due to cost reductions partially offset by a mix shift from trucks to passenger cars, higher incentives and adverse foreign currency exchange. Sales were $19.2bn, down from $19.9bn.
South America automotive operations pre-tax profit improved to $95m from $88m thanks mainly to higher industry volume.
International operations reported a pre-tax loss of $21m, compared with $176m profit in second quarter 2005.
The combined second-quarter pre-tax loss for Ford Europe and PAG automotive operations was $57m, compared with a pre-tax profit of $83m last year.
Ford Europe‘s pre-tax profit was $105m, up from $66m during the 2005 period due primarily to material costs reductions offset partially by unfavourable vehicle sales mix and lower net pricing. Second quarter sales were $7.4bn, compared with $7.9bn in Q2 2005.
Premier Automotive Group reported a pre-tax loss of $162m for the second quarter, compared with a pre-tax profit of $17m. Ford said the decline was due to the expiry of favourable currency hedges put in place in previous years, adjustments to warranty accruals for prior models, and lower market share at Volvo in advance of new model introductions. But new products from Land Rover, Jaguar and Aston Martin had good launches. Second-quarter PAG sales were $7.8bn, compared with $7.9bn a year ago.
Asia Pacific and Africa/Mazda reported a combined pre-tax profit of $36m, compared with $93m in 2005.
Ford Falcon volumes (the line is sold primarily in Australia and New Zealand) and weaker industry volumes in traditional markets were partially offset by cost reductions. Sales were $1.8bn, compared with $2bn in 2005.
Ford’s Q2 share of Mazda pre-tax profits and associated operations was $32m, compared with $57m during the same period a year ago. The decline was due to the non-recurrence of gains during the second quarter of 2005 on the automaker’s investment in Mazda’s convertible bonds, which have now been entirely converted to equity.
Financial Services earned a Q2 pre-tax profit of $646m, compared with $1.3bn a year ago. Ford Motor Credit Company reported net income of $441m in the second quarter of 2006, down on earnings of $740m a year earlier.
The decrease in earnings reflected higher borrowing costs, the impact of lower average receivable levels, lower credit loss reserve reductions and higher depreciation expense.
Ford projects North America production at 670,000 units, down 58,000 units year-on-year, and 40,000 units less than previously announced – reflecting lower truck production to maintain appropriate dealer stock levels.
Ford Europe production is projected at 410,000 units, up 38,000 units from last year, primarily reflecting the timing of holiday shutdowns. PAG production is projected at 150,000 units, down 3,000 units from last year.
