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After two straight quarterly losses, the automaker warns a third may be difficult to prevent.
©Associated Press
© St. Petersburg Times, published October 18, 2001
DEARBORN, Mich. -- Ford Motor Co. reported its second straight quarterly loss Wednesday and its chief financial officer said he expected the world's No. 2 automaker to lose money in the fourth quarter as well.
"It will be difficult to earn a profit in the fourth quarter, but earnings should be better than the third quarter," said Ford chief financial officer Martin Inglis during a teleconference with reporters.
Ford said it lost $692-million in the third quarter as its sales slumped 9 percent and it sold 15 percent fewer vehicles in North America. Still, the results were in line with Wall Street expectations.
"Bottom line, an unsatisfactory quarter, and we need to do more," Inglis said.
Ford's loss amounted to 38 cents a share in the July-September period. Excluding $190-million for one-time items, including costs related to the restructuring of its Mazda and Land Rover units, Ford lost $502-million, or 28 cents a share. A year earlier, Ford earned $888-million, or 53 cents a share, in the third quarter.
Total revenues were $36.5-billion, a 9 percent decline from $40.06-billion a year ago.
Investors responded by pushing shares of Ford down 55 cents at $17.13 in trading on the New York Stock Exchange.
The automaker reported its North America operations lost $849-million during the third quarter, compared with a profit of $782-million in the third quarter of 2000.
The automaker attributed the loss to a 15 percent decline in vehicle sales from last year and higher marketing costs.
Ford saw its North American market share drop from 23.2 percent in the second quarter to 22.2 percent during the third quarter. Ford's third-quarter market share a year ago was 22.8 percent. To adjust for the slowing sales, Ford says it will reduce vehicle production in the fourth quarter by 9 percent from the fourth quarter of 2000.
Inglis said that aside from slower vehicle sales, the cost of incentives is dangerously eroding the bottom line -- not just for Ford, but for the industry as a whole.
"I think these levels of marketing costs are unhealthy for the industry," Inglis said.
Ford, General Motors Corp. and DaimlerChrysler AG all began offering interest-free financing in the weeks after the Sept. 11 terror attacks as a means of reinvigorating sales. All three programs were scheduled to be discontinued at the end of October, but GM said Wednesday it would extend its program through Nov. 18.
Inglis said Ford hasn't yet decided if the automaker will follow suit, while DaimlerChrysler said no decision had been made on whether to extend the program.
"It's scary how costly it is becoming to get buyers into the dealerships," said Efraim Levy, senior automotive analyst for Standard & Poor's. "Today's incentives are taking sales away from tomorrow's sales."
As it seeks to cut costs and return to profitability, Ford has been in the midst of a restructuring that began last summer with the installation of former Ford European chief Nick Scheele as head of North American operations and the shuffling of other top level managers. Other moves will be announced in December, Inglis said Wednesday.
The company previously announced it is cutting 4,000 to 5,000 white collar positions by the end of the year.
Inglis said Ford would take a $1-billion before taxes charge in the fourth quarter to cover the costs of buyouts being offered those employees to leave voluntarily.
Ford's continued losses have spawned published reports regarding the future of president and CEO Jacques Nasser. Inglis said he didn't know where they were coming from and that Nasser and chairman William Clay Ford Jr. were getting along well. "Things are changing," said Levy with Standard & Poor's. "Nasser doesn't have the same support as he did."