Ford beats expectations despite loss
Bryce G. Hoffman / The Detroit News
Ford Motor Co. surprised Wall Street this morning with better than expected financial results, posting a $380 million loss for the third quarter of 2007.
That represents a major improvement over the same period in 2006, when Ford lost $5.2 billion. Analysts had expected the company to lose about $1.17 billion before taxes for the quarter, according to a survey conducted by Bloomberg.
Worldwide, Ford's revenue totaled $41.1 billion for the quarter, up from $37.1 billion for the third quarter of 2006. North American sales totaled $16.5 billion, up from $15.4 billion last year.
The company's third-quarter loss from continuing operations, excluding special items, was just a penny per share, or $24 million, compared with a loss of 45 cents per share, or $850 million, for the same three-month period a year ago. A survey of 14 analysts predicted an average loss of 47.2 cents per share.
"The results that we shared today give us a lot of confidence," said CEO Alan Mulally during a conference call with analysts and reporters. "Overall, we are making significant progress implementing our plan."
Most of Ford's gains came from its foreign operations, but even its North American automobile operations showed significant improvement over last year.
Ford's North American auto business reported a pre-tax loss of $1 billion, compared with a pre-tax loss of $2.1 billion a year ago.
In this country, Ford has stabilized its retail market share after a decade-long decline, but a strategic decision to cut unprofitable sales to daily rental fleets has translated into a sharp decline over last year's volumes. It also continues to miss important cost-reduction goals.
Ford, which is in the midst of one of the broadest restructurings in its 104-year history, is struggling to meet its target of restoring profitability no later than 2009. Many analysts still see that as a stretch goal for a company that lost $12.6 billion last year.
The Dearborn automaker has eliminated some 44,000 jobs since the end of 2005, and another round of buyouts is expected following ratification of a new contract with the United Auto Workers. That process, which is slated to begin today, should be completed by Wednesday.
That agreement, which was reached Saturday after a week of marathon bargaining, would allow Ford to hire new workers for about half what it pays current hourly employees in the United States. It would also transfer an estimated $23 billion in hourly retiree health care liabilities to a new, union-run trust fund.
However, the deal also requires Ford to keep open some U.S. factories that it had planned to close -- plants that are operating well below capacity.
"The agreement that we've negotiated with the UAW is going to significantly improve our competitiveness going forward," Mulally said, though he declined to discuss details of the contract, saying he wanted to respect the union's ratification process. "Our new agreement is very supportive of our plan."
He promised a full and detailed briefing on the contract once it is ratified.
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