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Ford Reports $12.7 Billion Loss in 2006

January 26, 2007

DETROIT — Ford Motor Co. has reported greater-than-expected fourth quarter loss, noting it would cut production for the current quarter and lose market share through September.

Ford posted a fourth-quarter net loss of nearly $5.8 billion, or $3.05 per share, on declining sales of its profitable trucks and charges for employee buyouts. That compared to a loss of $74 million, or 4 cents per share, last year.

Ford's loss from continuing operations was $1.10 cents a share, which was wider than the average Wall Street analyst expectations of a loss of 94 cents per share as tracked by Reuters Estimates.

The company posted a record loss of $12.7 billion for 2006, breaking Ford's previous record net loss of $7.39 in 1992.

Ford shares fell during pre-market trade and then recovered to be unchanged from the Jan. 24 close of $8.20 on the New York Stock Exchange.

Ford, which is in the early stages of a four-year turnaround plan that includes closing 16 plants and cutting up to 45,000 jobs in North America, said charges reduced fourth-quarter results by $3.7 billion after taxes, or $1.95 per share.

Ford expects its U.S. market share will fall through the third quarter as it pulls back from sales to car rental companies and other fleet operators.

The company suspended its practice of providing detailed financial forecasts a year ago.

The Dearborn, Mich.-based automaker cut its previously announced first quarter production target in North America by 10,000 units to 740,000 vehicles, a 15.5 percent decline from the same quarter a year ago.

Fourth-quarter revenue totaled $40.3 billion, down from $46.3 billion from the same period a year ago. Auto sales were $36 billion, down from $40.7 billion from a year earlier. Ford repeated its forecast that its cash burn, including restructuring expenses, would be about $17 billion between 2007 and 2009, with $8.5 billion of that outflow this year.

Ford last month took the step of mortgaging assets, including its U.S. plants, to borrow over $23 billion to fund the cash burn it expects.

The company projected that its own capital spending would be about $7 billion in 2007, and expects U.S. industry wide auto and truck sales would total about 16.8 million units in 2007 with overall incentive spending higher. That would imply a roughly flat U.S. market for sales of cars and trucks, in line with many industry forecasts.

Ford cut North American production 22 percent in the fourth quarter and completed a buyout offer with unionized factory workers that cut 38,000 jobs. Its U.S. sales dropped 8 percent drop for the year.

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