Ford forecasts $17 billion cash outflow from 2007-09
Amy Wilson | Automotive News
DETROIT -- Ford Motor Co. expects to go through $17 billion in cash during the next three calendar years, with more than half of that occurring in 2007.
The cash outflow primarily will be the result of substantial operating losses in Ford Motor's automotive operations through 2008 and cash expenditures related to employee departures. Ford detailed the expected financial results in a regulatory filing today.
Ford said it also expects automotive cash inflows of about $4 billion in the 2007-2009 time period. That reflects the use of $3 billion in a long-term trust set up to pay for retiree benefits, proceeds from the receipt of government tax refunds and affiliate tax payments, and proceeds from planned divestitures of its Aston Martin and Automobile Protection Corp. units, offset partially by pension contributions.
That results in a net cash burn of $13 billion from the end of 2006 through 2009. Ford said it expects to have $38 billion on hand by the end of this year, including $18 billion in new financing it is seeking now. Ford said by the end of 2009 it expects to have $25 billion on hand.
Ford also said it expects an automotive operating-related cash outflow of about $3 billion in the fourth quarter of 2006, as well as restructuring-related cash expenditures of $500 million to $1 billion.
Beginning in 2007, Ford Motor Credit Co. is expected to suspend regular dividend payments. Ford Credit paid Ford Motor dividends of $2.3 billion in 2005, $4.2 billion in 2004 and $3.6 billion in 2003. Ford Credit has paid dividends of $950 million through the first three quarters of this year.
The company also said Ford Motor earnings will deteriorate in 2007 primarily because of lower earnings at Ford Credit and higher interest costs associated with a higher level of debt at Ford.
Ford said it expects Ford Credit's profitability in 2008 and 2009 to improve from 2007 levels.
The disclosures were contained in a presentation Ford Motor made today to prospective lenders and investors. Ford said Monday, Nov. 27, that it is seeking an $18 billion financing package. Ford intends to use its plants, office buildings and other automotive assets as collateral to secure $15 billion of the financing.
Ford also said it expects to continue to invest about $7 billion annually in new products through 2009. That's about the same level of product-related investment as the past few years.
Amy Wilson | Automotive News
DETROIT -- Ford Motor Co. expects to go through $17 billion in cash during the next three calendar years, with more than half of that occurring in 2007.
The cash outflow primarily will be the result of substantial operating losses in Ford Motor's automotive operations through 2008 and cash expenditures related to employee departures. Ford detailed the expected financial results in a regulatory filing today.
Ford said it also expects automotive cash inflows of about $4 billion in the 2007-2009 time period. That reflects the use of $3 billion in a long-term trust set up to pay for retiree benefits, proceeds from the receipt of government tax refunds and affiliate tax payments, and proceeds from planned divestitures of its Aston Martin and Automobile Protection Corp. units, offset partially by pension contributions.
That results in a net cash burn of $13 billion from the end of 2006 through 2009. Ford said it expects to have $38 billion on hand by the end of this year, including $18 billion in new financing it is seeking now. Ford said by the end of 2009 it expects to have $25 billion on hand.
Ford also said it expects an automotive operating-related cash outflow of about $3 billion in the fourth quarter of 2006, as well as restructuring-related cash expenditures of $500 million to $1 billion.
Beginning in 2007, Ford Motor Credit Co. is expected to suspend regular dividend payments. Ford Credit paid Ford Motor dividends of $2.3 billion in 2005, $4.2 billion in 2004 and $3.6 billion in 2003. Ford Credit has paid dividends of $950 million through the first three quarters of this year.
The company also said Ford Motor earnings will deteriorate in 2007 primarily because of lower earnings at Ford Credit and higher interest costs associated with a higher level of debt at Ford.
Ford said it expects Ford Credit's profitability in 2008 and 2009 to improve from 2007 levels.
The disclosures were contained in a presentation Ford Motor made today to prospective lenders and investors. Ford said Monday, Nov. 27, that it is seeking an $18 billion financing package. Ford intends to use its plants, office buildings and other automotive assets as collateral to secure $15 billion of the financing.
Ford also said it expects to continue to invest about $7 billion annually in new products through 2009. That's about the same level of product-related investment as the past few years.