Ford revises 2009 return to profit down to break-even

Ford Motor Company today said it is making adjustments to its production plan and revising downward its short-term North American automotive profit outlook, while planning further manufacturing capacity realignments, additional cost reductions and changes to its product mix to respond to the changing US business environment.
 
Ford said it now plans to produce 690,000 vehicles in North America during the second quarter, a further reduction of 20,000 units from previously announced planned production levels and a decline of 15% from the second quarter of 2007. The company plans to produce between 510,000 and 540,000 units in the third quarter, down 15-20% from the same period last year. Fourth-quarter production is expected to be between 590,000 and 630,000 units, down 2-8% from a year ago.
 
The second-half production plan includes higher car and crossover production compared with a year ago and will be achieved through overtime and added shifts at Ford's smaller car and crossover assembly plants. Large truck and SUV production in the second half will be lower, with reductions achieved through a combination of additional downtime, shift reductions and line-speed reductions.
 
"Rapidly rising commodity prices - particularly steel prices - and higher gasoline prices that are accelerating consumers' shift away from large trucks and SUVs together are having a tremendous impact on our sales, our manufacturing operations and our profitability as we look to 2009," said Mark Fields, Ford's President of The Americas.
 
"Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal," CEO Alan Mulally said. "Overall, we expect to be about break-even companywide in 2009 - with continued strong results in Europe and South America."
 
Ford says it remains on track to reduce by $5 billion its annual North American Automotive operating costs by the end of 2008 - at constant volume, mix, and exchange and excluding special items - compared with 2005. However, further cost reductions and recognition of anticipated retiree health care savings from Ford's recent UAW labour agreement will be needed to offset higher commodity costs. Ford previously had anticipated that ongoing retiree health care savings in 2008 would allow it to exceed the $5 billion target.
 
Cash outflows associated with operating losses and employee separations now are projected to be between $14 billion and $16 billion for 2007 to 2009. This is worse than previous guidance but better than the original $17 billion outflow projection. Ford's automotive total liquidity - including available credit lines, the majority of which are in place until 15th December 2011 -- was $40.6 billion as of March 31st.
 
Ford now expects 2008 U.S. industry volume, including medium and heavy trucks, to be between 15 million and 15.4 million units. Ford, Lincoln and Mercury U.S. market share is expected to be approximately 14% this year -- supported by the introduction of several new products.
 
By the end of this year, 70% of all Ford, Lincoln and Mercury products by volume in North America will be new or significantly upgraded compared with 2006 models. By the end of 2010, 100 percent of the product lineup will be new, including the next-generation Mustang in 2009, new fuel-saving EcoBoost engines in 2009, a new European-engineered Transit Connect in 2009 and all-new Ford Fiesta small car in 2010 - as well as several other vehicles not yet announced.
From: autoindustry.uk/news

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