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Ford Reports $12.7 Billion Loss in 2006

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.

by Staff
January 26, 2007
2 min to read


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.

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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.

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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.

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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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