Ford - record losses in 2006

Manufacturing News, Source : The Manufacturer US
Published : 25 Jan 2007 20:14

Ford Motor Company has reported a 2006 full-year net loss of $12.7 billion, or $6.79 per share. In 2005, the company reported net income of $1.4 billion, or 77 cents per share.

Excluding special items, Ford’s 2006 full-year after-tax loss from continuing operations totaled $2.8 billion, or $1.50 per share. This compares to year-ago earnings from continuing operations of $1.9 billion, or $1.00 per share, excluding special items.

Special items, which primarily reflected costs associated with restructuring efforts and fixed asset impairments, reduced full-year results on an after-tax basis by a total of $9.9 billion or $5.29 per share. The total pre-tax effect of full-year special items was $11.9 billion.

Full-year sales and revenue for 2006 was $160.1 billion, compared to $176.9 billion a year ago.

"We began aggressive actions in 2006 to restructure our automotive business so we can operate profitably at lower volumes and with a product mix that better reflects consumer demand for smaller, more fuel efficient vehicles," said Alan Mulally, Ford's president and chief executive officer, in a press release. "We fully recognize our business reality and are dealing with it. We have a plan and we are on track to deliver."

Full year highlights

Ford Motor Company highlights in 2006 included:

*Alan Mulally joining Ford as president and CEO in September.

*An "accelerated" Way Forward plan to return North America to profitability no later than 2009 that calls for idling and ceasing operations at 16 manufacturing facilities through 2012, including seven vehicle assembly plants. The plan also calls for achieving a cumulative $5 billion in reduced operating costs by 2008, compared to 2005, and for 70 percent of Ford, Lincoln, and Mercury products by volume to be new or significantly upgraded by 2008.

*The idling of St. Louis Assembly in March and Atlanta Assembly in October, consistent with the North America restructuring plan.

*An agreement with the UAW to extend a variety of voluntary buyout offers to all U.S. Ford and Automotive Component Holdings, LLC (ACH) hourly employees. Through Dec. 31, 2006, more than 38,000 hourly employees had accepted offers. Many of the offers include an employee's opportunity to rescind acceptance up until the time of separation from the company. In addition, the company realized cost savings from the implementation of its health care agreement with the UAW.

*Efforts to reduce North America salaried-related costs by a third, which will reduce the salaried work force by the equivalent of 14,000 positions. In addition, we implemented cost-saving revisions to salaried benefit plans.

*Agreement in principle to sell three facilities now operated by ACH. Ford intends to sell or close all ACH facilities by the end of 2008.

*Plans to sell Automobile Protection Corporation (APCO), a subsidiary that offers vehicle service contracts to dealers of all makes and models, and all or part of Aston Martin.

*Launching new products that received strong initial feedback, including the Ford Edge and Lincoln MKX, Ford Expedition and Lincoln Navigator in North America, the Ford S-MAX, Ford Galaxy and Ford Transit in Europe, the Jaguar XK, Land Rover LR2, Volvo S80 and C30 and Mazda CX9.

*Ford S-MAX being named European Car of the Year 2007 and Ford Transit receiving International Van of the Year 2007. Ford also won the 2006 FIA World Rally Championship Manufacturers' Trophy.

*Record sales in China and India.

*A corporate realignment in December that streamlined the organization and formed a Global Product Development team, to better integrate and leverage global resources across the automotive business units.

*Obtaining $23.5 billion of new liquidity in December, including a convertible debt offering of about $5 billion, a secured term loan of $7 billion and a secured revolving credit facility of $11.5 billion. This resulted in total automotive liquidity of $46 billion at year-end 2006.

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