Ford’s (F) woes continue as the company posted a record $8.7 billion loss (down from a $750 million profit a year ago) after consumers continued to shun its oversized product lineup. The company’s European and Asian businesses are doing well, but Ford has made a hash of its core US business after making the same mistake it made in the 1970s.
The loss amounted to $3.88 per share, well short of the -$0.27 mean estimate. Ford’s sales have cratered as $4 gas convinces increasingly price-concious consumers to move away from the company’s traditional crop of trucks and SUVs.
Ford took $8 billion worth of write-downs related to asset impairments and announced that, as part of its “accelerated” transformation plan, it will convert three truck factories so that they can produce small cars. Revenue fell to $38.6 billion from $44.2 billion a year ago and exceeded the mean estimate of $34.6 billion. Perhaps more alarming, Ford’s traditionally profitable lending arm, Ford Motor Credit, swung to a $294 million loss.
Ford CEO Alan Mulally:
We continue to take decisive action in response to the rapidly changing business environment and remain absolutely committed to the four elements of our business transformation plan. Our European and South American operations are robust and profitable. We have momentum in Asia. And we are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America.”
Ford is assuming that oil prices will remain “volatile and high” and that the U.S. economic recovery won’t begin in earnest until 2010. As part of its transformation plan, Ford will be expanding its offering of smaller cars in North America, planning to double the production of hybrids and bringing 6 smaller European models to the U.S. Ford also said that it expects its ongoing downsizing and cost-cutting efforts to yield $5 billion in annual cost reductions by the end of 08.
These are all steps in the right direction, but in Ford’s case (and probably in GM’s too) it may be too late. By the time Ford has gotten its product lineups to the point where they can compete again, it will likely have lost so much share and scale that it will be a shadow of its former self.