Ford Narrows Loss; Sees Deal for Jaguar, Land Rover
Ford Motor posted a narrower-than-expected quarterly loss Thursday and said it was nearing a deal to sell its British luxury brands Jaguar and Land Rover.
Ford , whose shares were edging up slightly in recent trading, also forecast a substantial year-over-year improvement in fourth-quarter results.
The No. 2 U.S. automaker, which has struggled with declining U.S. sales and falling market share, said it was moving ahead of its own targets for its turnaround.
"The results of the third quarter show us that we're making significant progress implementing our plan to return to profitability in 2009," Chief Executive Alan Mulally told CNBC. "Every quarter, we continue to improve our fundamental costs and competitiveness."
The company said it expects to conclude a deal to sell Jaguar and Land Rover by early next year. By contrast, it said it would focus on improving results at its Swedish Volvo unit and start detailing the brand's financial performance next year.
Ford posted a third-quarter net loss of $380 million, or 19 cents per share, compared with a loss of $5.2 billion, or $2.79 a share, a year earlier, when it took charges for its restructuring.
Ford's loss from continuing operations, excluding one-time items, was 1 cent per share. On that basis, the average Wall Street forecast was a loss of 48 cents per share, according to Reuters Estimates.
The narrower-than-expected loss was in sharp contrast to larger rival General Motors , which shocked Wall Street on Wednesday by reporting a record quarterly loss of $39 billion. Ford said it had cut 6,800 jobs in North America during the third quarter, including 300 white-collar jobs.
Third-quarter revenue was $41.1 billion, up from $37.1 billion a year earlier. Global auto revenue rose to $36.3 billion from $32.5 billion.
Ford's auto operations posted a loss of $362 million before taxes and excluding special charges. Its financial services arm posted a pre-tax profit of $556 million.
In North America, Ford posted a narrower loss of $1 billion before taxes and excluding special items, compared with a loss of $2.1 billion a year earlier. It said the improvement reflected higher pricing as the automaker pulled away from cut-rate sales to car rental companies.
The company said it was ahead of schedule on some turnaround targets. Specifically, it said it had run through less cash than anticipated under a previous forecast that outflows could total $17 billion between this year and 2009.
Ford, which typically does not break out results for individual brands, said it plans to disclose Volvo's results beginning in 2008.
It also said it plans to better integrate the Volvo brand with its core Ford nameplate, especially in product development and purchasing.
The contrast between Ford and GM extended beyond the expected results. GM's former finance subsidiary, GMAC, in which GM retains a stake, was hurt in the third quarter by its exposure to the slumping market for housing finance. Ford's finance arm, Ford Motor Credit, has no exposure to that market.
GM took a $39 billion charge against deferred tax assets in the third quarter. Ford took its own similar, but smaller, charge in the third quarter of 2006.
Ford last week agreed to a tentative four-year labor contract with the United Auto Workers union that would help the automaker reduce labor costs by allowing it to hire new workers at lower rates and transfer retiree health-care liabilities to a trust fund Ford, which posted a record loss of $12.6 billion in 2006, has seen margins squeezed by intense competition and rising gasoline prices. The slow U.S. housing market has also hurt sales of its profitable pickup trucks to contractors and construction crews.
Ford's U.S. sales fell 18 percent during the third quarter.