US:Full-year profit is unlikely for Ford's Premier Automotive Group brands
Full-year profit is unlikely for Ford's Premier Automotive Group brands
AMY WILSON | Automotive News
DETROIT -- For the second year in a row, Ford Motor Co.'s Premier Automotive Group will be hard-pressed to turn a profit.
Ford's collection of luxury brands lost $146 million before taxes during the first nine months of 2005. PAG posted a pretax loss of $108 million in the third quarter alone.
Ford says the luxury unit will make money during the fourth quarter. But a full-year profit for PAG now seems unlikely.
Credit Suisse First Boston analyst Chris Ceraso expects that PAG's fourth-quarter profit will amount to only $11 million before taxes. Ceraso predicts in a research note that PAG will lose $135 million before taxes for all of 2005.
Another analyst panned Ford's PAG recovery efforts.
"There is no getting around the fact that Ford's PAG strategy has been a source of major disappointment for the company, even with the renewed success of Land Rover and Volvo," wrote Glenn Reynolds of CreditSights Inc. in an Oct. 20 research report.
Ford executives won't say whether PAG will lose money for the entire year. But they do admit that PAG will fall short of its full-year goal of at least $300 million in pretax profits. That goal was set in January, and the market has deteriorated significantly since then.
Even though PAG hasn't met expectations this year, the unit is improving, Ford CFO Don Leclair said in his third-quarter earnings call earlier this month.
A richer mix of vehicles and improved net pricing have helped narrow PAG's loss through the first nine months of this year. PAG lost $485 million before taxes during the first nine months of 2004, more than triple 2005's year-to-date loss.
The third-quarter loss surprised Merrill Lynch analyst John Casesa, who had been expecting a gain because of new vehicles such as the Land Rover LR3 and Range Rover Sport.
Casesa wrote last week in a research report: "It is clear that there is still much work to be done to structurally return PAG to the profit contributor it should be."
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....