Ford posts $7.7 billion loss

[GhiaMonster]

Article from news.com.au offered without comment - except "ouch"

Ford Motor overnight posted a quarterly loss of $5.8 billion ($7.66 billion), its largest loss in 14 years, as slower truck sales, charges for job cuts and asset write-downs in its troubled North American operations and elsewhere took their toll on the car maker.

Ford's loss for the third quarter ended last month included heavy provisions for its hard-hitting restructuring plan, which foresees plant closures and thousands of job cuts to restore profitability.

With those provisions omitted, its loss came to $US1.2 billion ($1.58 billion), compared to $US191 million ($A252.23 million) before exceptional items a year earlier.

Ford said it was considering raising new funding secured by its automotive assets in order to protect its cash position as it pays the bill to close 16 plants and cut up to 45,000 jobs.

"These business results are clearly unacceptable," said Chief Executive Alan Mulally, who took over at Ford in early September.

Analysts have urged Mr Mulally to consider further asset sales to protect Ford's cash position, and in his first post-earnings conference call with analysts some credited him with a more open approach to the company's turnaround.

"One of the things that's positive about Mulally coming in is that nothing is sacred and he is willing to take a fresh look," said Morningstar analyst John Novak.

[nugget378]

Thats an extraordinary amount of money,makes my head hurt just trying to imagine it...

[Deadman]

You've really got to wonder, who would want to be a vehicle manufacturer these days...

[Smoked]

Sad times in a loss, even more to come.

[Ruger]

damn and thats just a quartely loss.

[charles_wif_xf]

To stem the bloodloss, they are considering selling off their European brands.

[brodfloyd]

if i was ford, i'd sell my north american brands!!! (yes, never gonna happen, i know)
sure the euro's lose money, but no way near that much.
even ford aus can turn a profit, a small one yes, but still a profit.
it must be hard work to run a business that poorly to lose that much money in 1/4 of a year. Think how hard it would be to spend 7 billion dollars and have nothing to show for it???

[uranium_death]

Originally Posted by brodfloyd

if i was ford, i'd sell my north american brands!!! (yes, never gonna happen, i know)
sure the euro's lose money, but no way near that much.
even ford aus can turn a profit, a small one yes, but still a profit.
it must be hard work to run a business that poorly to lose that much money in 1/4 of a year. Think how hard it would be to spend 7 billion dollars and have nothing to show for it???

Steve Bracks does it all the time.
He needs a lot of gel to keep that sexy hairstyle of his.

[XRQTOR]

Originally Posted by brodfloyd

if i was ford, i'd sell my north american brands!!! (yes, never gonna happen, i know)
sure the euro's lose money, but no way near that much.
even ford aus can turn a profit, a small one yes, but still a profit.
it must be hard work to run a business that poorly to lose that much money in 1/4 of a year. Think how hard it would be to spend 7 billion dollars and have nothing to show for it???

Ford au's profit may be small on a world scale but factor in around 2omillion people in australia and around 26o million in the us and you'll see it isn't to shabby, there market is 13 times the size of our's.

[brodfloyd]

Originally Posted by XRQTOR

Ford au's profit may be small on a world scale but factor in around 2omillion people in australia and around 26o million in the us and you'll see it isn't to shabby, there market is 13 times the size of our's.

thats my point exactly, and also being that we only have 20 million ppl, it should mean that its harder to make money (economies of scale and such)

its just scary, that ford au, which i love but still has many problems that most of us point out from time to time, can still make a profit and ford US is on track to lose 28billion dollars this year.

[Bud Bud]

This is a real worry. I do not know any other big business that could really sustain theses types of losses. GM included. GM has gone through a lot of pain recently as well and the VE Zeta platform was nearly orphaned, but is back in favour now and will play a part in future GM world rear wheel drive programs.

Even if Ford Aus is making a small profit, what guarantees do Ford Aus now have from the parent company of any future investment to develop our own brands here??? What cut backs if any could the Orion see now???

[TZENU]

Could this be a repeat of One.Tel? except we are being told???

But considering the unstable prices of oil, one would imagine this loss will grow

[robjh80]

Wonder how Hyundai is going in comparison?........I remember reading an article some years ago about how they had long term visions of becoming one of the biggest auto makers in the world, maybe that day is fast approaching?

[Poetic Justice]

I think Mulally was a good score for Ford global, I think he will do a good job at trying to rectify the situation.

I think Ford still has high hopes of regaining what it once was

[Sapper]

Hmmm, this is what happens when companies get raped by unions and regulations

[Polyal]

Not good at all, but there are alot of plans in place, FoA isn't going to be greatly affected, small lay offs maybe, but they have picked up a few projects (courier for example) that will keep them busy for the next 4 years or so.

I just hope Aston stays!

Alot of the new and up coming models are good, its the majority of the current and past NA stuff thats killing them, have you seen it?!!! How could they not see it coming!

[4.9 EF Futura]

No accountants?

The loss is one of a paper nature. They've raised a huge provision on the book to account for the MASSIVE amounts of money they'll have to pay out when they start letting more people go. To the tune of about 4.6 billion dollars

The provision is raised at the expense of the profit and loss statement.

Dont get me wrong, $1.2b losses are not sustainable, but dont get too wrapped up in the numbers. They're just putting money aside for an inevitable expense - its good corporate practice... lol, actually under international financial reporting standards they're probably required to raise the provision.

These companies are very very very very very very well capitalised. They can sustain massive losses for a significant period of time.

Here's fomoco's balance sheet:

http://finance.yahoo.com/q/bs?s=F

Take note of the asset base. They have 3 times more money in long term investments than they do in plant and equipment. Can gradually be converted into cash... with any luck, increase in value in the meantime...

Also note the retained earnings they have built up in shareholder's equity. Usually used to fund a business' growth but in dire times - that money is there to absorb losses.

Cash flow is key for FoMoCo and it always will be... no good making profit if it's tied up in illiquid assets. Statement of cash flows can be accessed from above link and you'll note that the cash reserves are not being burnt as fast as you would think.

I dont know if debt is the best strategy for raising more cash... achieves the desired result in the short term... but just puts additional strain on the cash reserves as you need to repay that interest. And at junk bond status, debt is going to be costly.

The time to be precious about the company is gone. Hopefully the "outsider" running the show is willing to start selling assets... lots of them. In the past they've borrowed and borrowed and borrowed... like everyone else in the industry.

So in my uneducated opinion, id say they need to focus on cash in the short term. At least until they weather out the storm whilst they re tool the business... at which stage hopefully the P&L turns around and they start making money... and then the balance sheet will look after itself. Hopefully wont here too much of the dreaded "insolvency" word between now and then....

[FPV8U]

There is still alot of work ahead of Ford and GM for them to climb out of these holes they have dug for themselves, but it is certain they are working their @$$ off to turn this around.

Man thats a big los though...

[XR8putts]

That really is a worry, no matter which way you look at it :(

That kinda loss means less V8 development.. leaving FPV/XR8 screwed.

[Black XR6]

Even if Ford Aus is making a small profit, what guarantees do Ford Aus now have from the parent company of any future investment to develop our own brands here??? What cut backs if any could the Orion see now???

I'd expect they would have none. But Ford Aus turning a profit should give them some leverage to argue their funding requirements. You more likely to fund a project that is already turning a profit rather than sink even more dollars into a sinking ship.

[vztrt]

Originally Posted by Black XR6

I'd expect they would have none. But Ford Aus turning a profit should give them some leverage to argue their funding requirements. You more likely to fund a project that is already turning a profit rather than sink even more dollars into a sinking ship.

Unfortunatly FOA didn't make a profit this quarter, actually they havent made a profit since this time in 05. The rest of Ford Asia Pacific South Africa actually have been propping up FOA.

[XRQTOR]

From memory Ford credit keeps the brand afloat.

[4.9 EF Futura]

Originally Posted by XRQTOR

From memory Ford credit keeps the brand afloat.

$262m for the 3rd quarter, down a whoppin' $300 odd mill. But still positive.

Ford Credit are losing 2000 employees as part of the group's overall restructuring.

Lol, marketwatch are reporting that Ford is considering securitising some of its plant and equipment (http://www.marketwatch.com/News/Stor...52F5ED456F3%7D).

Now THAT is innovative management, the kind of 'thinking outside the square' thats needed in such times.

[allypally]

I just can't understand it. What did they do with all the money I paid for my car? Obviously didn't reach the bank

[Sorted]

What the? How can they be loosing money when they were selling 1 SVU every 2 seconds in the USA, well thats what was said on "Top Gear"

It was a F150 SVU or something.............