* Net loss of 7 cents per share, or $123 million, for the second quarter of 2006.
* Loss from continuing operations, excluding special items, of 3 cents per share, or $48 million.*
* Strong liquidity with total automotive cash, including cash equivalents, marketable securities and loaned securities, at $23.6 billion.
* Ford Credit pre-tax profit of $656 million.
DEARBORN, Mich., July 20, 2006 - Ford Motor Company [NYSE: F] today reported a net loss of 7 cents per share, or $123 million, for the second quarter of 2006. This compares with net income of 47 cents per share, or $946 million, in the second quarter of 2005.
Ford's second-quarter loss from continuing operations, excluding special items, was 3 cents per share, or $48 million, compared with a profit of 47 cents per share, or $936 million, in the same period a year ago.*
Ford's second-quarter total sales and revenue was $42 billion, down $2.5 billion from a year ago.
* Earnings per share from continuing operations, excluding special items, is calculated on a basis that includes pre-tax profit and provision for taxes and minority interest. See table following "Safe Harbor/Risk Factors" for the nature and amount of these special items and a reconciliation to GAAP.
"We've seen an improvement in North America results in the second quarter, but the external factors we face aren't going to get any easier," said Chairman and Chief Executive Officer Bill Ford. "Mark Fields (executive vice president and president - The Americas) and his team have been working on plans to accelerate their efforts. Within the next 60 days, we'll be in a position to discuss the additional actions we will be taking."
Special items reduced earnings by 4 cents per share in the second quarter. The pre-tax effect of these items included:
* A favorable adjustment of $146 million, or 5 cents per share, to the previously announced first-quarter $1.7 billion special charge pertaining to expected layoff and jobs bank benefits and voluntary termination packages. This adjustment is based on recent agreements at the Atlanta Assembly Plant and the St. Louis Assembly Plant for buyouts and employee relocation.
* A charge of $171 million, or 6 cents per share, associated with additional personnel reduction programs at facilities other than those being idled, as well as a related charge of $315 million, or 11 cents per share, associated with pension curtailments related to second-quarter buyouts. The pension curtailment charge represents the impact of earlier retirements, enhanced benefits, and the accelerated recognition of future service costs associated with our U.S. hourly pension plan.
* Other gains of $148 million, or 8 cents per share, primarily associated with our equity interest in a non-recurring gain that Mazda realized on the transfer of its pension liabilities back to the Japanese government.
Year-to-date highlights included:
* Continued strong performance of Ford Fusion, Mercury Milan and Lincoln Zephyr in North America.
* Significant warranty enhancements to our 2007-model Ford, Lincoln and Mercury vehicles sold in the United States and Canada , as well as increased standardization of customer-valued safety features.
* Court approval of the U.A.W.-Ford health care agreement.
* Successful introduction of the all-new S-MAX, new Galaxy, and new Transit in Europe.
* Successful launch of the all-new Jaguar XK Coupe and Convertible, continued strong global sales growth at Land Rover and Aston Martin, and positive initial reception of the new Volvo S80 sedan.
* Continued strong year-to-date sales growth in major international markets, including a 100 percent increase in China , and a 75 percent increase in India .
Executive Vice President and Chief Financial Officer Don Leclair said, "Although we've made progress on a number of fronts, clearly we have more to do. This includes maintaining our focus on improving our quality, reducing our costs and maintaining our strong liquidity as we respond to the tougher operating environment we face."
The following discussion of the results of our Automotive sector and Automotive business units is on a basis that excludes special items. See table following "Safe Harbor/Risk Factors" for the nature and amount of these special items and a reconciliation to GAAP.
AUTOMOTIVE SECTOR
On a pre-tax basis, worldwide Automotive sector losses in the second quarter were $808 million. This compares with a pre-tax loss of $245 million during the same period a year ago.
Worldwide automotive sales for the second quarter declined to $37.7 billion from $38.7 billion in the same period last year. Worldwide vehicle unit sales in the quarter were 1,732,000, up from 1,718,000 a year ago.
Total cash, including cash equivalents, marketable securities and loaned securities, at June 30, 2006 was $23.6 billion, down from $23.7 billion at the end of the first quarter.
THE AMERICAS
For the second quarter, The Americas reported a pre-tax loss of $702 million, compared with a pre-tax loss of $819 million in the same period a year ago.
North America: In the second quarter, Ford's North America automotive operations reported a pre-tax loss of $797 million, compared with a pre-tax loss of $907 million a year ago. The improvement is more than explained by cost reductions in most areas of the business, partially offset by a mix shift from trucks to passenger cars, higher incentives and adverse foreign currency exchange. Sales were $19.2 billion, down from $19.9 billion for the same period a year ago.
South America: Ford's South America automotive operations reported a second-quarter pre-tax profit of $95 million, an improvement from a pre-tax profit of $88 million a year ago. The improvement was more than explained by higher industry volume. Sales for the second quarter improved to $1.3 billion from $1 billion in 2005.
INTERNATIONAL OPERATIONS
In the second quarter, International Operations reported a pre-tax loss of $21 million, compared with a pre-tax profit of $176 million in second quarter 2005.
FORD EUROPE AND PREMIER AUTOMOTIVE GROUP (PAG)
The combined second-quarter pre-tax loss for Ford Europe and PAG automotive operations was $57 million, compared with a pre-tax profit of $83 million in the same period a year ago.
Ford Europe: Ford Europe's second-quarter pre-tax profit was $105 million compared with a pre-tax profit of $66 million during the 2005 period. The improvement was explained by cost reductions, primarily in material costs. Unfavorable market mix of vehicle sales and lower net pricing were partial offsets. During the second quarter, Ford Europe's sales were $7.4 billion, compared with $7.9 billion during second quarter 2005.
Premier Automotive Group (PAG): PAG reported a pre-tax loss of $162 million for the second quarter, compared with a pre-tax profit of $17 million for the same period in 2005. The decline is more than explained by the impact of the expiration of favorable hedges that were put in place in previous years, adjustments to warranty accruals for prior models, and lower market share at Volvo in advance of new model introductions. These factors were partially offset by favorable product and market mix, driven largely by the success of new products at Land Rover, Jaguar and Aston Martin. Second-quarter sales for PAG were $7.8 billion, compared with $7.9 billion a year ago.
ASIA PACIFIC AND AFRICA/MAZDA
In the second quarter, Asia Pacific and Africa/Mazda reported a combined pre-tax profit of $36 million, compared with a pre-tax profit of $93 million in 2005.
Asia Pacific and Africa: For the second quarter, Asia Pacific and Africa reported a pre-tax profit of $4 million, compared with a pre-tax profit of $36 million a year ago. Lower Ford Falcon volumes and weaker industry volumes in traditional markets were partially offset by cost reductions. Sales were $1.8 billion, compared with $2 billion in 2005.
Mazda: During the second quarter of 2006, Ford's share of Mazda pre-tax profits and associated operations was $32 million, compared with $57 million during the same period a year ago. The decline is more than explained by the non-recurrence of gains during the second quarter of 2005 on our investment in Mazda's convertible bonds, which have now been entirely converted to equity.
OTHER AUTOMOTIVE
Second-quarter results included a pre-tax loss of $85 million in Other Automotive, compared with a profit of $398 million a year ago. The year-over-year decline is more than explained by the non-recurrence of tax-related interest adjustments, partially offset by higher interest income from the company's cash portfolio reflecting higher short-term interest rates and higher average cash balances.
FINANCIAL SERVICES SECTOR
For the second quarter, Financial Services sector earned a pre-tax profit of $646 million, compared with pre-tax profits of $1.3 billion a year ago.
Ford Motor Credit Company: Ford Motor Credit Company reported net income of $441 million in the second quarter of 2006, down $299 million from earnings of $740 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $656 million in the second quarter, compared with $1.2 billion in the previous year. The decrease in earnings primarily reflected higher borrowing costs, the impact of lower average receivable levels, lower credit loss reserve reductions and higher depreciation expense.
THIRD-QUARTER PRODUCTION VOLUMES
North America third-quarter production is projected at 670,000 units, down 58,000 units on a year-over-year basis, and 40,000 units less than what was previously announced. This change from the prior level is more than explained by lower truck production, reflecting our intention to maintain appropriate dealer inventory levels. Ford Europe production is projected at 410,000 units, up 38,000 units from last year, primarily reflecting the timing of vacation shutdowns. PAG production is projected at 150,000 units, down 3,000 units from last year.
There is talk here in Australia of Ford dropping the luxury Fairlane and LTD models.
they have not been selling well. Holden luxury vehicles are struggling too, but the Statesman and Caprice are propped up by sales to governments....state and federal.
Rex
On the Sunshine Coast, in the Sunshine State Queensland (QLD), Australia
Yes- and the Town Car, Crown Vic and Merc. Marquis are apparently on the chopping block, too...
the Town Car, Crown Vic and Merc. Marquis
Are thse all variations on the one platform.. Is Ford in USA stil Ford and then the Lincoln-Mercury Division?
Fairlane and LTD here in OZ are based on the Falcon Station Wagon chassis...which is longer than the sedan
Rex
On the Sunshine Coast, in the Sunshine State Queensland (QLD), Australia
Yes - all spin-offs of a single RWD platform - but staples of the cop/livery/old fart fleets!
but staples of the cop/livery/old fart fleets
Oh similar then to Holdens Caprice/Statesman and Fords LTD as far as the old farts go
Cops here (OZ) use Commodore (comode) and the Ford Falcon.
Rex
On the Sunshine Coast, in the Sunshine State Queensland (QLD), Australia
Even the old farts need wheels!
Uhmm that would hurt the limo and law enforcement areas. Cops don't like FWD cars.Originally Posted by Eric
"Uhmm that would hurt the limo and law enforcement areas. Cops don't like FWD cars."
I agree; I think they're nuts to kill off the cars - or make them FWD. All they need is an update to make them appealing to a broader buyer base (Cadillac did it; so can Lincoln).
As bad as things are at GM, they're worse at Lincoln....
Maybe they shouldn't have tried to sell a rebadged F-150 pickup truck, then.
They had a good thing going with the LS as a mid-sized luxury sedan, but didn't keep it updated, and the rest of their cars weren't brought up to match it in terms of looks, luxury, and ride.
Chip H.
Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala
Spot on...
As I wrote earlier to John B., things are desperate at Lincoln right now; might be too late to pull out of the dive....
They were trying to copy GM with the re-badged Suburbans....Maybe they shouldn't have tried to sell a rebadged F-150 pickup truck, then.
They had a good thing going with the LS as a mid-sized luxury sedan, but didn't keep it updated, and the rest of their cars weren't brought up to match it in terms of looks, luxury, and ride.
Chip H.
Typical short term business plan. No patience to wait.
By the time a car starts to make inroads into the market place they kill it. The Mark 8, both Gen I and II would have been an import killer had they been properly marketed to the younger, more affluent crowd. Instead they pushed it to the older Lincoln buyers.
Same with the LS. By the time they had a decent motor and transmision in it they kill it....
Oh well... The T-bird was another fiasco. Had they priced it $4-5K less it would have been a great seller.
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