This time last year we were telling you about how Ford lost a whopping $5.7 billion in the third quarter of 2006. We've got good news: Ford only lost $380 million in the third quarter of 2007. Mission Accomplished! Break out the fizzy wine and caviar! Revenue was up to $41.1 billion for the quarter, compared to just $37.1 billion in 3Q06. The improvement is tied to "higher net pricing, changes in currency exchange rates and improved product mix." By improved product mix we totally hope they're talking about the Taurus, which totally didn't exist a year ago. Full press release below the jump...
DEARBORN, Mich., Nov. 8, 2007 - Ford Motor Company [NYSE: F] today reported a net loss of 19 cents per share, or $380 million, for the third-quarter of 2007. This compares with a net loss of $2.79 per share, or $5.2 billion, in the third-quarter of 2006.
Ford's third-quarter revenue was $41.1 billion, up from $37.1 billion a year ago. The increase primarily reflected higher net pricing, changes in currency exchange rates, and improved product mix.
Ford's third-quarter loss from continuing operations, excluding special items, was 1 cent per share, or $24 million, compared with a loss of 45 cents per share, or $850 million, in the same period a year ago.**
Special items reduced pre-tax results by $350 million in the third-quarter. These were more than explained by costs associated with our previously announced Trust Preferred Securities exchange offer, and charges associated with Ford Europe and PAG personnel reductions and other restructuring actions. Favorable cost adjustments associated with Ford North America personnel reduction programs were a partial offset.
Automotive gross cash, which includes cash and cash equivalents, net marketable securities, loaned securities and short-term VEBA assets, was $35.6 billion at Sept. 30, 2007, an increase of $1.7 billion from year-end 2006.
The company continues to explore in greater detail the potential sale of Jaguar and Land Rover with interested parties and anticipates these discussions will culminate in an agreement no later than early next year.
In addition, the company has been conducting a strategic review of Volvo, and has developed a plan. The first priority of the plan is to improve financial performance at Volvo. The plan also includes: enhancing Volvo's position as a global producer of premium vehicles; establishing appropriate business arrangements between Volvo and Ford-brand operations to allow Volvo to operate on a more stand-alone basis in the absence of the PAG structure; and, continuing to achieve synergies between Ford-brand operations and Volvo in areas such as product development and purchasing. The company plans to disclose Volvo's financial performance beginning with 2008 results.
"Our third-quarter performance is very encouraging," said Ford President and Chief Executive Officer Alan Mulally. "We can see our plan taking hold with significant improvement continuing in our core Automotive operations. We remain committed to executing the four priorities of our plan - restructuring the business to operate profitably, accelerating the development of new products that our customers want and value, funding our plan and improving our balance sheet, and working even more effectively together as one Ford team, leveraging our global assets."
Highlights for 2007 thus far include:
* Tentative agreement reached with the United Auto Workers (UAW) on a new four-year national labor contract, subject to ratification by UAW members, which significantly improves our competitiveness going forward.
* Strong performance in the 2007 third-quarter U.S. Global Quality Research System (GQRS) study.
* Ford Taurus, Taurus X and Mercury Sable earned Top Safety Pick ratings from the Insurance Institute for Highway Safety (IIHS) for achieving the highest possible ratings in frontal, side and rear crash test performance.
* The Ford Mustang convertible became the first sports car and first convertible in history to earn the highest possible safety ratings from the National Highway Traffic and Safety Administration (NHTSA). The Mustang convertible earned five star ratings in all crash test and rollover categories.
* Ford SYNC - the company's fully integrated, voice-activated in-car communications and entertainment system developed in association with Microsoft - won one of 10 Popular Mechanics' "Breakthrough Awards" which recognize products that set new benchmarks in design, creativity and engineering.
* Ford South America unit sales up 19 percent year-to-date.
* Ford Europe records sixth consecutive quarter of year-over-year profit improvement, and Ford Europe unit sales rose more than 5 percent in first nine months of 2007.
* Ford Mondeo joins three other models - Ford Focus, Galaxy and S-MAX - with a five star performance on the Euro NCAP top 10 list, reinforcing Ford Europe's position as the manufacturer with the highest number of vehicles in the top 10 for adult occupant protection.
* Best-ever quarter for Land Rover unit sales.
* Ford China unit sales up 27 percent in the first nine months of 2007.
* Launched operations at new assembly plant in Nanjing, China . The new plant will produce the latest small-car models from both Ford and Mazda.
* Achieved $1.8 billion in cost savings in first nine months of 2007, including $600 million in the third quarter (at constant volume, mix and exchange; excluding special items).
* Continued to align capacity to match demand and improve our productivity in North America, reducing personnel by 6,800 in the third-quarter.
AUTOMOTIVE SECTOR
On a pre-tax basis, worldwide Automotive sector losses in the third-quarter were $362 million. This compares with a pre-tax loss of $1.9 billion during the same period a year ago. The improvements were more than explained by higher net pricing, lower costs, and improved volume and mix, partially offset by higher interest expense, and unfavorable changes in currency exchange rates.
Vehicle wholesales in the third-quarter were 1,487,000, up from 1,467,000 a year ago. Worldwide Automotive revenue for the third-quarter was $36.3 billion, up from $32.5 billion in the same period last year. The increase primarily reflected higher net pricing, changes in currency exchange rates, and improved product mix.
Ford North America: In the third-quarter, Ford North America reported a pre-tax loss of $1.0 billion, compared with a pre-tax loss of $2.1 billion a year ago. The improvement primarily reflected higher net pricing and improved product mix, partially offset by unfavorable changes in currency exchange rates. Revenue was $16.5 billion, up from $15.4 billion for the same period a year ago.
Ford South America: Ford South America reported a third-quarter pre-tax profit of $386 million, compared with a pre-tax profit of $201 million a year ago. The improvement was primarily explained by higher net pricing and higher volume. third-quarter revenue improved to $2.1 billion from $1.5 billion in 2006.
Ford Europe: Ford Europe's third-quarter pre-tax profit was $293 million, compared with a pre-tax loss of $13 million during the same period in 2006. The improvement was more than explained by lower costs and higher net pricing, partially offset by lower volume and less favorable mix. During the third-quarter of 2007, Ford Europe's revenue was $8.3 billion, compared with $7.3 billion during the third-quarter of 2006.
Premier Automotive Group (PAG): PAG reported a pre-tax loss of $97 million for the third-quarter, compared with a pre-tax loss of $508 million for the same period in 2006. The third-quarter 2007 result reflected a loss at Volvo, partially offset by a small profit at the combined Jaguar and Land Rover operation. The year-over-year improvement was primarily explained by cost reductions across all brands, including the non-recurrence of adverse 2006 adjustments to warranty reserves. Higher volumes and higher net pricing were partially offset by the effect of the continued weakening of the U.S. dollar against key European currencies. Thirdquarter 2007 revenue was $7.4 billion, compared with $6.5 billion a year ago.
Ford Asia Pacific and Africa: For the third-quarter, Ford Asia Pacific and Africa reported a pre-tax profit of $30 million, compared with a pre-tax loss of $56 million a year ago. The improvement primarily reflected cost reductions and higher net pricing, partially offset by adverse product mix, mainly in Australia . Revenue was $1.8 billion for the third-quarter of 2007, compared with $1.6 billion in 2006.
Mazda: For the third-quarter, Ford earned $18 million from its investment in Mazda and associated operations, compared with $40 million during the same period a year ago.
Other Automotive: third-quarter results included a pre-tax profit of $29 million, compared with a profit of $553 million a year ago. The year-over-year deterioration primarily reflected the non-recurrence of last year's taxrelated interest.
FINANCIAL SERVICES SECTOR
For the third-quarter, the Financial Services sector earned a pre-tax profit of $556 million, compared with a pre-tax profit of $750 million a year ago.
Ford Motor Credit Company: On a pre-tax basis from continuing operations, Ford Motor Credit Company earned $546 million in the third-quarter compared with $730 million in the previous year. The decrease in earnings was more than explained by the non-recurrence of prior-year credit loss reserve reductions, higher depreciation expense for leased vehicles and higher borrowing costs.
OUTLOOK
The company is ahead of its 2007 plan both on a pre-tax and net income basis, and anticipates substantial year-over-year improvement in fourth quarter results. Fourth quarter Automotive and Company pre-tax results are expected to be a loss, more than explained by North America. Full-year pre-tax results excluding special items are expected to be in the range of a small loss to breakeven, which would be a significant improvement from a year ago.
Excluding gains or losses from future divestitures, special items for full-year 2007 are expected to be a charge in the range of $1 billion to $2 billion, including a one-time, non-cash charge estimated to be approximately $1.4 billion relating to a proposed change in business practice for offering and announcing retail variable marketing incentives to our dealers.
Ford Motor Credit expects to earn $1.3 billion to $1.4 billion this year on a pre-tax basis, excluding the impact of gains and losses related to market valuation adjustments from derivatives, consistent with the previous estimate.
Looking ahead, the company's progress in 2007 reflects it is on track to meet its goal of being profitable in North America and Total Automotive in 2009. The company also is on track to meet its North American cost reduction target of $5 billion by 2008 as compared with 2005. Progress is being made on achieving U.S. market share goals, and the company is ahead of its $17 billion cash outflow target for the 2007 to 2009 period.
"Our third-quarter and year-to-date performance indicate that our plan is working," said Mulally. "Our full-year pre-tax outlook excluding special items is to be substantially better than 2006. We remain committed to improving our business and delivering our plan."[Ford Media]