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Ford Posts Big Loss

Ford Motor Co. St. Louis Assembly Plant
AP
Ford Motor Co. announced it lost nearly $5½ billion in 2001, nearly all of it in the fourth quarter, as it gets ready to restructure, cut tens of thousands of jobs, and close at least five North American plants.

It's the company first annual loss since 1992.

The fourth-quarter loss compared with a net profit of $1.1 billion in the same period a year earlier. It closed the books on a horrific year for the world's second-largest automaker, which posted its first annual loss since 1992 due to problems including the Firestone tire crisis, poor quality, costly recalls and a heated incentives war amid the U.S. economic slowdown.

Ford's loss for the October-December quarter amounted to $2.81 a share. During the last three months of 2000, Ford earned 57 cents a share.

But the quarterly results narrowly beat Wall Street expectations if one-time items are excluded from the comparison.

Those costs included $4.1 billion in restructuring costs and an additional $102 million in accounting charges.

Excluding those items, Ford's loss was $860 million, or 48 cents a share, for the October-December period.

The company posted a $5.07 billion loss for the fourth quarter of 2001, and $5.45 billion for the entire year, its first annual loss since 1992.

The consensus forecast of analysts polled by Thomson/First Call was that Ford would lose 50 cents a share excluding special costs.

Revenue fell to $41.15 billion in the quarter from $42.59 billion a year ago.

For all of 2001, Ford lost $3.02 per share, compared with earnings of $3.47 billion, or $2.30 a share, in 2000.

This was Ford's first losing year since 1992 when Ford lost $7.4 billion, in large part because of almost $7 billion in accounting charges.

Revenues for 2001 were $162.4 billion, down 5 percent from $170.1 billion a year ago.

Ford said it sold 6 percent fewer vehicles in 2001 than it did the year before.

The Dearborn, Michigan-based automaker ousted its hard-knuckled former chief executive Jacques Nasser in October.

All of Detroit's Big Three automakers have been hurt by the U.S. recession, overcapacity and growing competition from Asian and European automakers. But Ford, which cut its dividend last week for the second time since October, has been hardest hit by the economic slowdown, dwindling cash reserves, credit losses and shrinking U.S. market share.

By comparison, General Motors Corp., the world's largest automaker, reported fourth-quarter earnings of 60 cents per share on Wednesday, reflecting stronger-then-expected U.S. vehicle sales. GM's fourth-quarter results were down 58 percent, however.

Ford's shares have under-performed GM's by about 20 percent since the September 11 attacks on the United States.

As part of its turnaround plan, Ford announced last Friday that it was cutting 10 percent of its work force, or 35,000 jobs worldwide, slashing production capacity by about 16 percent, killing off four low-profit vehicles and closing as mny as seven North American plants.

Ford Chief Operating Officer Nick Scheele also said Ford would try to raise about $1 billion from the sale of non-core assets this year. Those assets include the Kwik-Fit auto repair chain Ford operates in Europe and two small U.S.-based businesses: Collision Team of America, a chain of collision repair centers, and Greenleaf LLC, a chain of automotive recycling centers.

If everything works according to its plan, Ford would break even in 2002 through $2 billion in pretax profit improvement this year, and achieve $9 billion by the middle of the decade.

But the plan assumes that the U.S. market will continue to support sales of 16 million new vehicles a year, and that market share for the Ford brand will hold steady at 19 percent — even though Ford is cutting models and has no new major vehicles before 2004.

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