• Jan 29, 2009


Ford has so far been able to avoid suckling on the teat of the federal government like its cross-town rivals, but after today's announcement of a 2008 fourth-quarter loss of $5.9 billion, serious questions are beginning to arise about how FoMoCo will fair in 2009.

This will be the third consecutive year Ford hasn't posted a profit, with a $2.8 billion loss in the previous year and $620 million drop during the same quarter of 2007. Ford wrapped up 2008 with $13.4 billion in cash reserves, but has announced plans to draw $10.1 billion in available credit to weather what's sure to be a rough 2009. That would bring Ford's liquidity up to $23.5 billion, sans the money already used for January, and the automaker contends that this is enough to meet its goals for the year. However, if Ford continues its fourth-quarter cash burn rate of $1.83 billion a month, there's a distinct possibility that FoMoCo execs might be knocking on Uncle Sam's door before the year comes to a close.

On a more positive note, Ford posted a 2008 pre-tax profit of $1.06 billion in Europe, although the last quarter saw a drop of $330 million. Hit the jump for Ford's full press release.

[Source: Ford, Photo by Joe Raedle/Getty]

PRESS RELEASE

FORD REPORTS 4TH QUARTER 2008 NET LOSS OF $5.9 BILLION; GAINED MARKET SHARE IN U.S., EUROPE, ACHIEVED COST TARGET
  • Net loss of $5.9 billion, or $2.46 per share, for the fourth quarter of 2008 amid a sharp global decline in vehicle demand; pre-tax loss of $3.7 billion from continuing operations, excluding special items. ++
  • Reduced Automotive costs by $1.4 billion in fourth quarter and $4.4 billion in 2008 versus year-ago levels. Achieved $5.1 billion in North America cost reductions at year-end 2008 compared with 2005, excluding favorable impact of depreciation and amortization from asset impairment at the end of the second quarter.
  • Decisively reduced global dealer stocks by more than 50,000 vehicles compared with the third quarter. Ford now has among the lowest days' supply in the industry.
  • Product transformation continues to gain strength, helping the company to gain market share in Europe for fourth quarter and full year, and in the U.S. in the fourth quarter.
  • Total liquidity of $24 billion, including Automotive gross cash of $13.4 billion, at Dec. 31, 2008. +++
  • Ford is drawing its available credit lines due to concerns about the instability of the capital markets with the uncertain state of the economy. The $10.1 billion will be added to company cash for the first quarter 2009.
  • The United Auto Workers union has agreed to end the "jobs bank" at Ford. The company and the union are presently working out the details of implementation.
  • Based on current planning assumptions, Ford has sufficient Automotive liquidity to fund its business plan and product investments and does not need a bridge loan from the U.S. government.
  • Ford remains on track for both its overall and its North American Automotive pre-tax results to be at or above breakeven in 2011, excluding special items.

Financial Results Summary

Fourth Quarter

Full Year

2008

O/(U) 2007

2008

O/(U) 2007

Wholesales (000) ++

1,138

(505)

5,404

(1,149)

Revenue (Bils.) ++

$ 29.2

$ (16.3)

$ 139.3

$ (34.6)

Continuing Operations ++

Automotive Results (Mils.)

$ 3,279)

$ 2,390)

$ (6,203)

$ (5,105)

Financial Services (Mils.)

(384)

(653)

( 495)

(1,719)

Pre-Tax Results (Mils.)

$ (3,663)

$ 3,043)

$ (6,698)

$ 6,824)

After-Tax Results (Mils.)

$ (3,273)

$ 2,786)

$ (7,119)

$ 6,695)

Earnings Per Share ++++

$ (1.37)

$ (1.14)

$ (3.13)

$ (2.92)

Special Items Pre-Tax (Mils.)

$ (1,386)

$ 2,466

$ (7,605)

$ (3,733)

Net Income

After-Tax Results (Mils.)

$ (5,875)

$ (3,064)

$ (14,571)

$ (11,848)

Earnings Per Share

$ (2.46)

$ (1.13)

$ (6.41)

$ (5.03)

Automotive Gross Cash (Bils.) +++

$ 13.4

$ (21.2)

$ 13.4

$ (21.2)



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    • 1 Second Ago
  • 45 Comments
      • 5 Years Ago

      Well they do have good products in the pipeline like the Fiesta, Euro Focus,New Taurus,New Mustang etc. Among the current product the Fusion,Flex,Mustang and F-150 are very good.
      • 5 Years Ago
      I think the trouble here is that Ford is going to burn through ALL its cash just to reach a point where it is breaking even. They are treating 2011 like its the end of the race and they are trying to conserve fuel just to reach that point. But what happens after 2011 when they have zero cash and *might* be turning a small profit? I don't think any of the "big 3" have produced a business plan that looks beyond the next 2 years, or that address long-term sustainability.

      These massive short-term changes aren't addressing the factors that brought them to this point in the first place.
      • 5 Years Ago
      Ford is so reluctant to copy their European business model over here in the US. Quarter after quarter, they are profitable in the EU but not here. Even though Ford is going to bring over more Euro-based cars, they are going to be dumbed down and cheapened for the US market. Why not offer premium products here? Break out of the mold and give Ford US a better lineup.
        • 5 Years Ago
        You already pay EU prices for a car, the new MUNU is identical price between UK (where it is built) and USA [at the current exchange rate]
        • 5 Years Ago
        "G-Meister: No matter how good, Americans will NOT pay what Europeans pay for cars. No way, no how."

        How do you know? How do you have any clue what a European Ford would cost here?




        • 5 Years Ago
        That was supposed to say MINI
        • 5 Years Ago
        G, i am not an expert at this, but this is how i see it. European cars are nicer, because they cost more.

        Let's say you are a Focus costumer. You pay 14-15K for the car. If Ford will introduce a new Focus that us nicer inside but one that will cost 16-18K, that will drive the consumer away. If you are paying 16-18K you may as well go and get a Civic.

        Bottom line in, better materials, ........more money.
        • 5 Years Ago
        @rypt:

        And the MINI is more expensive than its competitors.

        On that note, I think G-Meister's comment is stil valid. While the MINI is basically the only automaker with increasing sales currently, it's not as though they are setting the sales charts on fire. For 2008, they sold 54,077 cars. That pales in comparison to other vehicles of similar size. Many other automakers' compact offerings outsell MINI by a long shot.

        I'd place that blame very much on the price of the vehicle. The Hardtop Cooper starts at $19,200. MINI's are pretty much always considered premium compacts due to their price compared to similar vehicles. Plus, their customer base tends to weigh more heavily on the upper class folks as well.

        By comparison, Toyota sold some 351,007 Corollas in 2008. while not a direct competitor, it's at least in roughly the same size class. The Honda Civic sells even more than the Corolla. Both are also quite a bit cheaper than the MINI.

        Part of it may be the US consumers' aversion to hatchbacks, but nonetheless, despite great sales percentages, they still are nowhere near being able to be called a great-selling car.
        • 5 Years Ago
        No matter how good, Americans will NOT pay what Europeans pay for cars. No way, no how.
      • 5 Years Ago
      Call me crazy but Ford's 4th quarter loss i'sn't that horrible. I expected worse considering the ecomomic times and the state of the auto industry in the 4th quarter. The question is whether Ford can survive on losses for the upcoming quarters and still continue to invest in product development without aid.

      Also, for all those praising Ford over the other domestic companies as of late (GM, Chrysler I don't even count anymore), I would look a little closer. Don't get me wrong Ford is making great strides. There business model makes a lot more sense. The company downsized and morgaged their assets at the right time and is finally investing in quality products. However, their product lineup needs work still. Specifically lincoln and Mercury. The MKS is not a credible flagship vehicle, why would anyone pay 10k more and they can get the same car minus styling in the 2010 Taurus, the rest of the line up needs work too, except for MKT, their all refaced fords. They needed to make some power moves with lincoln to compete and become credible again but Ford didn't deliver, they are good cars just not good enough. The LS chasis should have been stretched and refined to create a RWD flagship Lincoln. Mercury has had no direction for decades, Ford has no clue what to do with it, I say kill it or make the whole line up small upscale fuel efficient cars that ford and lincoln don't sell, its not that difficult. Ford had been too cheap in its product develpment in the days when it actually could afford it. Example, the focus should be the best car in its class if it was updated like it should have been. In 99' it was viewed as best in class, but after 10 years and minor refaces its stale. So they still need to make better product decisions.

      • 5 Years Ago
      Ford Europe make cars people want.
        • 5 Years Ago
        If by "All PEOPLE", you mean all people who want a Fiesta, then yes, you are correct. Not everyone wants the same thing. If all the people in the U.S. wanted cars like what Ford sells in Europe, then the Toyota Camry wouldn't be our best selling car.

        I for one DO NOT want a Fiesta. Too small, too ugly. I'm just fine with an Accord, Malibu, or even the new Fusion. Why does everyone assume that because THEY want the Fords from Europe, everyone else does too?

        Sure, the Euro-spec Fords may be damn good cars, but that doesn't mean they will sell any better than the cars they sell here now. For Fords sake, I hope they do, but only time will tell.
        • 5 Years Ago
        Ford Europe makes IN EUROPE cars ALL people want.
        • 5 Years Ago
        Ford Europe makes car people IN EUROPE want.
      • 5 Years Ago
      45 000 U$ burnt every minute during the last 3 month of last year.. Yeehaa!!!
      • 5 Years Ago
      Jesus...I meant "Their"
        • 5 Years Ago
        Fair enough.
        • 5 Years Ago
        Don't tell Jesus, He didn't write your post. :-)
      • 5 Years Ago
      Of the D3, Ford posted the least abount of sales loss last quarter, things are going to be ugly accross the board. Analysts are predicting the market to bounce back late this year or early next year, hopefully the D3 can survive until then.
      • 5 Years Ago
      Ford probably would have been profitable after this year if it hadn't been for the meltdown. Considering Toyota posted a 1.8 billion loss this year, I don't think we can make many claims about poorly run/dumb automakers.

      That said, Chrysler and GM do need to get their act together faster, or at least more visibly.
      • 5 Years Ago
      Question: Do the legacy costs in Ford's North America operations get spread across the whole company, or when they list that Ford of Europe makes a profit, does that mean that the accounting for NA retiree benefits doesn't touch the European operation budget?
      • 5 Years Ago
      With Ford having lost nearly 30 billion in the last 3 years that equates to loosing more than 27million every day! WOW!
        • 5 Years Ago
        Bling, Bling, Money ain't a thang. Ask me again, and am i tell you the same.


        Booyaaaaaaaaaa
      • 5 Years Ago
      "Could someone calculate the burn-rate also for hours, seconds and weeks, pwetty PLZ?"
        • 5 Years Ago
        $189 million a week
        $1.125 million a hour
        $18,750 a minute
        $312.50 a second

        Yes, I am a smartass ;-)
        • 5 Years Ago
        Oh, that that is using BoneHeadOtto's numbers
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