Saturday, January 11, 2003
Ford says turnaround on track
Company expects modest profit for 2002, improved market share in 2003
By John Porretto / AP Auto Writer
DETROIT -- Ford Motor Co. chairman Bill Ford pronounced his company's turnaround on track after one year Friday, but he acknowledged that increasing competition and economic uncertainties pose challenges for meeting future financial goals.
The world's No. 2 automaker expects to post a modest profit in 2002 after losing nearly $5.5 billion a year earlier.
The company also forecasts earnings of 70 cents a share in 2003 -- some 24 cents higher than the consensus estimate of Wall Street analysts polled by Thomson First Call.
Ford reports 2002 financial results Jan. 21.
"One year ago today I told you we were going to fix the Ford Motor Co.," Ford said in a meeting with securities analysts attending the North America International Auto Show. "I can tell you after one year I feel a lot more confident in that statement."
Ford and other executives discussed the company's 2002 performance and 2003 goals. Last January, the company began a five-year revitalization plan that called for cutting 35,000 jobs, closing five plants and discontinuing four models.
Without being specific, Ford said the company's financial performance last year exceeded year-ago forecasts. The company has said it expects to earn 40 cents a share for 2002, or $750 million.
Like others in the industry, Ford expects U.S. light vehicle sales to decline in 2003 to about 16.5 million, down from 16.8 million last year.
The company said it expects quality and market share to improve worldwide this year and for both pretax automotive income and operating cash flow to break even.
Ford said its quality ratings improved in '02 after being flat for four years.
"These milestones demonstrate that Ford intends to deliver another year of strong and measurable results that support the plan we outlined one year ago," said vice chairman and chief financial officer Allan Gilmour.
In a research note this week, UBS Warburg analyst Saul Rubin said there's "no quick fix solution" for the company, which turns 100 in June.
"At this point, it's hard to imagine a scenario in which we become more positive on Ford in the near term," the note said. "Even a successful restructuring of operations will take many years and include many headaches."
Analysts have said it could be difficult for Ford and other domestic automakers to grow their U.S. market share as foreign transplants such as Toyota Motor Corp., Nissan Motor Co. and Hyundai Motor Co. add new products and manufacturing capacity in North America.
Ford saw its U.S. market share decline to 21.3 percent in 2002 from 22.9 percent the year before, according to Ward's Automotive Reports.
Toyota and Honda on the other hand -- the two largest foreign players in the U.S. -- both saw their shares rise last year. Toyota, including the Lexus brand, went to 10.4 percent from 10.2 percent while Honda, including Acura, went to 7.4 percent from 7.1 percent.
Pension liabilities continue to be a drag -- as they are for many other large companies. Preliminary figures show Ford's worldwide pension plans were underfunded by $14.5 billion at year's end, including $7.3 billion in the United States. The return on U.S. pension assets was off 9.7 percent last year.
Ford, which has maintained pension plans for more than 50 years, said it contributed $500 million to the U.S. fund Jan. 6 and plans to add another $500 million in the first half of '03.
The automaker has decided to reduce its assumption for how much it will earn from investments to 8.75 percent this year from 9.5 percent in 2002.
Slumping investment returns in the equities markets and a growing number of retirees have been the biggest factors contributing to underfunded plans.
In his remarks to analysts, Ford said the company's turnaround continues to be product-led, and he pointed to this week's auto show in Detroit as confirmation.
Ford introduced 15 production and concept vehicles at the show, three times more than what it typically unveils.
Ford executives were particularly upbeat about the debut of the new F-150 pickup truck and the next-generation Mustang, both of which are considered crucial to the turnaround.
The F-150 is part of Ford's F-Series trucks -- the best-selling vehicles in the world -- and Ford said no lineup of vehicles has been more important for the company in the past 50 years.
He said smooth production of the new F-150 is vital. It will be watched closely by analysts because of some troubled launches in Ford's recent past.
"We will nail the launch of this product," Ford said.
In afternoon trading Friday on the New York Stock Exchange, Ford shares were up 27 cents to $10.50.
On the Net:
Ford Motor Co., http://www.ford.com/