Ford plans "significant" plant closures
While this article doesn't give projected numbers of job losses, it's pretty simple to know that you can't close plants and not cut jobs.
As always, I'll post any followup I find and add it to the total at the top of the page.
Namaste,
Brian
iWon Money & Investing
Thursday October 20, 10:36 AM EDT
By Poornima Gupta
DETROIT (Reuters) - Ford Motor Co. (F) on Thursday said it swung to a loss in the third quarter as sales of sport utility vehicles declined, and Chief Executive Bill Ford Jr. warned of "significant plant closings" to help slash costs in North America.
The quarterly loss, the first for Ford since the fourth quarter of 2003, follows a protracted decline in the company's U.S. market share and deepening financial woes. U.S. sales of Ford vehicles are down 1.3 percent so far this year despite a massive discount program that helped clear inventory of unsold vehicles.
Ford and cross-town rival General Motors Corp. (GM), which reported a $1.6 billion quarterly loss earlier this week, have seen their margins squeezed by intense competition in the U.S. market and by a dramatic slowdown in sales of mid-size and large SUVs, their former cash cows, due to high gasoline prices.
The companies are also struggling with higher costs and a cut in their credit ratings to high-yield, or "junk," status this year.
Bill Ford said on a conference call that Ford, the No. 2 U.S. automaker, was delaying until January a long-awaited restructuring announcement for its North American vehicle operations, which have lost more than $1.4 billion before taxes so far this year.
"That plan will include significant plant closings where facilities don't fit our strategy moving forward," he said.
JP Morgan analyst Himanshu Patel said that while there were no major surprises in the third quarter report, the lack of specific restructuring news was disappointing.
"While fundamentals are admittedly weak, given the stock's weak recent performance, we are reluctant to get incrementally bearish, particularly ahead of a potential restructuring announcement," Patel said in a note to subscribers.
"That said, we continue to favor GM over Ford due to the former's more favorable 2006 product cycle, and its more aggressive restructuring approach."
AUTOS MIRED IN THE RED
Ford reported a third-quarter net loss of $284 million, or 15 cents per share, compared with a profit of $266 million, or 15 cents a share, a year earlier.
Excluding special charges, the company lost $191 million, or 10 cents a share, a penny worse than the average forecast of analysts polled by Reuters Estimates.
Despite the net loss, Ford remains in the black for the year as a whole, while GM has lost about $3.8 billion through the first nine months of the year. Earlier this week, GM announced a deal with the United Auto Workers union to slash the company's multibillion-dollar health-care costs and said it was exploring the possible sale of a big stake in its finance arm.
Bill Ford said Ford is in talks with the UAW regarding health-care costs and expects the UAW to agree to a deal for Ford similar to one at GM.
Dearborn, Michigan-based Ford said third-quarter revenue rose to $40.86 billion from $39.1 billion a year earlier.
For the year, the automaker, which cut its fourth-quarter production target by 2.4 percent to 810,000 vehicles, said it expects earnings to be at the lower end of its forecast range of $1 to $1.25 per share.
Its auto operations posted a loss of $1.3 billion before taxes and excluding special charges, while its finance arm contributed net profit of $577 million. In North America, Ford lost $1.2 billion during the quarter, before taxes and excluding special items.
The company blamed lower dealer inventories, unfavorable vehicle mix, lower pricing, and higher warranty and material costs for the loss in North America, which is Ford's largest revenue-generating unit.
Ford's luxury brands, grouped under the Premier Automotive Group, narrowed their pretax loss to $108 million from $171 million a year earlier.
Ford Chief Financial Officer Don Leclair said the group would miss its full-year profit target of $300 million to $600 million.
Ford shares were down 10 cents, or 1 percent, to $8.37 in morning trade on the New York Stock Exchange.
As of Wednesday, the shares were down more than 40 percent for the year, compared with a 1.3 percent decline in the S&P 500 index . The shares currently trade at about 7.7 times estimated 2006 earnings, well below the average multiple of 16 for components of the S&P 500 index.
©2005 Reuters Limited.
As always, I'll post any followup I find and add it to the total at the top of the page.
Namaste,
Brian
iWon Money & Investing
Thursday October 20, 10:36 AM EDT
By Poornima Gupta
DETROIT (Reuters) - Ford Motor Co. (F) on Thursday said it swung to a loss in the third quarter as sales of sport utility vehicles declined, and Chief Executive Bill Ford Jr. warned of "significant plant closings" to help slash costs in North America.
The quarterly loss, the first for Ford since the fourth quarter of 2003, follows a protracted decline in the company's U.S. market share and deepening financial woes. U.S. sales of Ford vehicles are down 1.3 percent so far this year despite a massive discount program that helped clear inventory of unsold vehicles.
Ford and cross-town rival General Motors Corp. (GM), which reported a $1.6 billion quarterly loss earlier this week, have seen their margins squeezed by intense competition in the U.S. market and by a dramatic slowdown in sales of mid-size and large SUVs, their former cash cows, due to high gasoline prices.
The companies are also struggling with higher costs and a cut in their credit ratings to high-yield, or "junk," status this year.
Bill Ford said on a conference call that Ford, the No. 2 U.S. automaker, was delaying until January a long-awaited restructuring announcement for its North American vehicle operations, which have lost more than $1.4 billion before taxes so far this year.
"That plan will include significant plant closings where facilities don't fit our strategy moving forward," he said.
JP Morgan analyst Himanshu Patel said that while there were no major surprises in the third quarter report, the lack of specific restructuring news was disappointing.
"While fundamentals are admittedly weak, given the stock's weak recent performance, we are reluctant to get incrementally bearish, particularly ahead of a potential restructuring announcement," Patel said in a note to subscribers.
"That said, we continue to favor GM over Ford due to the former's more favorable 2006 product cycle, and its more aggressive restructuring approach."
AUTOS MIRED IN THE RED
Ford reported a third-quarter net loss of $284 million, or 15 cents per share, compared with a profit of $266 million, or 15 cents a share, a year earlier.
Excluding special charges, the company lost $191 million, or 10 cents a share, a penny worse than the average forecast of analysts polled by Reuters Estimates.
Despite the net loss, Ford remains in the black for the year as a whole, while GM has lost about $3.8 billion through the first nine months of the year. Earlier this week, GM announced a deal with the United Auto Workers union to slash the company's multibillion-dollar health-care costs and said it was exploring the possible sale of a big stake in its finance arm.
Bill Ford said Ford is in talks with the UAW regarding health-care costs and expects the UAW to agree to a deal for Ford similar to one at GM.
Dearborn, Michigan-based Ford said third-quarter revenue rose to $40.86 billion from $39.1 billion a year earlier.
For the year, the automaker, which cut its fourth-quarter production target by 2.4 percent to 810,000 vehicles, said it expects earnings to be at the lower end of its forecast range of $1 to $1.25 per share.
Its auto operations posted a loss of $1.3 billion before taxes and excluding special charges, while its finance arm contributed net profit of $577 million. In North America, Ford lost $1.2 billion during the quarter, before taxes and excluding special items.
The company blamed lower dealer inventories, unfavorable vehicle mix, lower pricing, and higher warranty and material costs for the loss in North America, which is Ford's largest revenue-generating unit.
Ford's luxury brands, grouped under the Premier Automotive Group, narrowed their pretax loss to $108 million from $171 million a year earlier.
Ford Chief Financial Officer Don Leclair said the group would miss its full-year profit target of $300 million to $600 million.
Ford shares were down 10 cents, or 1 percent, to $8.37 in morning trade on the New York Stock Exchange.
As of Wednesday, the shares were down more than 40 percent for the year, compared with a 1.3 percent decline in the S&P 500 index . The shares currently trade at about 7.7 times estimated 2006 earnings, well below the average multiple of 16 for components of the S&P 500 index.
©2005 Reuters Limited.
posted by Brian | 7:56 AM
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