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Restructuring charges cost Ford in Q1

Reuters

DETROIT (Reuters) -- Ford Motor Co. on Friday swung to a massive first-quarter loss as it took $1.65 billion in charges for jobs cuts, plant closings and other restructuring-related actions.

Ford, which is closing 14 plants and cutting up to 30,000 factory jobs in North America, said first-quarter net loss was $1.19 billion, compared with a profit of $1.21 billion a year ago.

Special items reduced earnings by $1.65 billion after taxes, the company said.

Ford said first-quarter revenue fell 9 percent to $41.1 billion from $45.1 billion a year earlier.

The loss comes as Ford's U.S. vehicle sales fell almost 3 percent in the first quarter of 2006 as sales of sport-utility vehicles slumped and the company's market share slipped slightly.

The quarterly results were Ford's first since the automaker announced its restructuring plan, dubbed the "Way Forward." The cost-cutting plan, designed to restore North American profits, is the second restructuring effort in four years under Chief Executive Bill Ford Jr.

The automaker expects to take a total of $3.4 billion in pre-tax charges for the full year, most of which related to its restructuring. Of that, the company took a total of $2.53 billion of pre-tax charges in the first quarter.

Ford and crosstown rival General Motors, which reported a $323 million quarterly loss on Thursday, have seen their margins squeezed by intense competition and shifting consumer tastes away from profitable sport utility vehicles.

At the same time, they are struggling with higher labor and raw material costs and a cut in their credit ratings to "junk" status.

Ford's core automotive operations posted a loss of $184 million before taxes and excluding special charges, while its finance arm contributed net profit of $479 million. In North America, Ford lost $457 million during the quarter, before taxes and excluding special items.
 
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