Ford reports largest loss in company history

Ford posts wider than expected loss

By Poornima Gupta 38 minutes ago

Ford Motor Co (NYSE:F - news) on Thursday capped the worst year in its 103-year history with a deeper-than-expected fourth quarter loss and said it would cut its production for the current quarter and lose market share through September.

The No. 2 U.S. automaker posted a fourth-quarter net loss of almost $5.8 billion, or $3.05 per share, on declining sales of its profitable trucks and charges for employee buyouts. That compared to a loss of $74 million, or 4 cents per share, a year ago.

Ford's loss from continuing operations was $1.10 cents a share, which was wider than the average Wall Street analyst expectations of a loss of 94 cents per share as tracked by Reuters Estimates.

The company posted a record loss of $12.7 billion for 2006, leaping past Ford's previous record net loss of $7.39 in 1992.

Ford shares slipped initially in pre-market trade and then recovered to be unchanged from Wednesday's close of $8.20 on the New York Stock Exchange.

Ford, which is in the early stages of a four-year turnaround plan that includes closing 16 plants and cutting up to 45,000 jobs in North America, said charges reduced fourth-quarter results by $3.7 billion after taxes, or $1.95 per share.

Ford expects its U.S. market share will fall through the third quarter as it pulls back from sales to car rental companies and other fleet operators.

The company suspended its practice of providing detailed financial forecasts a year ago.

The Dearborn, Michigan-based automaker also said its production would be down through the first half of the year but increase on a year-over-year basis in the second half.

Ford cut its previously-announced first quarter production target in North America by 10,000 units to 740,000 vehicles, a 15.5 percent decline from the same quarter a year ago.

REVENUE DOWN, CASH BURN IN FOCUS

Fourth-quarter revenue totaled $40.3 billion, down from $46.3 billion from the same period a year ago. Auto sales were $36 billion, down from $40.7 billion from a year earlier.

Ford repeated its forecast that its cash burn, including restructuring expenses, would be about $17 billion between 2007 and 2009, with $8.5 billion of that outflow this year.

Ford last month took the unprecedented step of mortgaging assets, including its U.S. plants, to borrow over $23 billion to fund the cash burn it expects.

The company projected that its own capital spending would be about $7 billion in 2007.

Ford expects U.S. industry wide auto and truck sales would total about 16.8 million units in 2007 with overall incentive spending higher.

That would imply a roughly flat U.S. market for sales of cars and trucks, in line with many industry forecasts.

Ford cut North American production 22 percent in the fourth quarter and completed a buyout offer with unionized factory workers that cut 38,000 jobs. Its U.S. sales dropped 8 percent drop for the year.