Ford Reports $8.7 Billion Second-Quarter Loss
The larger-than-predicted loss sent shares down 7 percent in premarket trading.
Ford attributed $8 billion of the loss to a one-time reduction of the value of its assets — mainly SUV and pickup truck plants and loans to buyers.
The total loss was equal to $3.88 cents per share. Excluding the one-time writedown, the loss was equal to 62 cents per share. That was larger than expected — Wall Street analysts had, on average, predicted a loss of 28 cents per share, according to an estimate by Bloomberg News. In the same quarter last year, the company saw a profit of $750 million, or 31 cents per share.
Ford said that it had $26.6 billion in cash at the end of the quarter, $10.8 billion less than this time last year.
“We’re confident that we have enough liquidity to get through,” chief financial officer Don Leclair told reporters, according to Reuters.
The company announced a host of changes to shift its production capabilities to small, fuel-efficient cars, as soaring gas prices drive customers away from trucks and SUVs. An SUV factory in Wayne, Mich., will begin to make small cars in 2010 and one in Louisville, Ky., will switch to small cars in 2011. The company also plans to double its production of hybrid cars by 2010 and bring six European models to the U.S. by 2012.
“We are accelerating the development of the new products customers want and value,” CEO Alan Mulally said in a statement, according to the Washington Post.
The company also said that it plans to cut 15 percent of its salaried costs. It has already eliminated 4,000 hourly jobs in the past three months through buyouts.
The second quarter loss is bad, Morningstar auto analyst David Whiston told the Washington Post. “But given their huge skew in sales for light trucks, it’s not a total surprise when you think about it,” he said. “It shows that if you want to invest in Ford you have to be patient. It shows they have to totally restructure that North American business.”