Ford Motor Co. Thursday will detail a record loss for 2006, the first U.S. automaker to report on a troubled year when the Detroit-based car makers are forecast to have lost some $15 billion on a combined basis, according to analysts.
Ford, which will report fourth-quarter and full-year results Thursday, was also the U.S. automaker hardest hit by rising interest rates, higher gas prices and a shift away from high-margin trucks.
Ford, which lost $7 billion through the first nine months of 2006, is expected to lose another $4.86 billion in the fourth quarter as it booked costs to close plants and cut jobs, according to Wall Street estimates tracked by Reuters Estimates.
“The basic story of Ford’s stunning collapse in its home-market profitability remains the same,” David Healy, Burnham Securities analyst, said in a note. “Ford’s finances were wrecked by the collapse in volume and pricing of its most profitable truck models.”
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, about half its U.S. factory work force. Its U.S. sales dropped 8 percent for the year.
For the first time since 1991, all three Detroit automakers are set to book losses in the same year, underscoring the changing taste of U.S. consumers and the intense competition from the likes of Toyota Motor Corp., now the No. 3 player in the U.S. market.
In 1991, the combined loss for the Detroit-based automakers — Ford, GM and Chrysler — was $8.5 billion. For 2006, analysts expect the total to be over $15 billion.
General Motors Corp. is expected to report a loss of $2.3 billion while DaimlerChrysler AG’s Chrysler Group is expected to post an operating loss of over $1 billion.
On an operating basis, forecasts for Ford’s fourth-quarter range from a loss of 63 cents per share to a loss of $1.52. The average estimate was for a loss of 95 cents per share, according to Reuters Estimates.
Ford stopped providing earnings forecasts a year ago, but analysts expect the company’s annual loss will be deeper than the the $7.39 billion Ford lost in 1992, its worst year yet.
But Wall Street analysts say they will look beyond the widely expected loss and press Ford Chief Executive Officer Alan Mulally for more detail on the automaker’s liquidity and turnaround progress.
“Most investors will be more concerned with the company’s year-end liquidity position and its cash burn,” Calyon Securities analyst Joseph Amaturo said in a note.
Ford last month took the unprecedented step of mortgaging assets, including its U.S. plants, to borrow over $23 billion to fund a cash burn it expects to tally $17 billion in the next three years.
Ford is hoping that once it cuts its manufacturing capacity, its new products will help return the company to profitability and help stem U.S. market share losses.
The company is aiming to hold its overall share of the U.S. market at about 14 percent, down from just over 17 percent in 2006.
Although Ford has said its entire line-up will be significantly upgraded by 2010, some analysts caution that Ford’s product plans look weak in comparison to rivals.
“Ford faces a hiatus in new products, and looks set to spend 2007 in the doldrums,” said JP Morgan Asia analyst Takaki Nakanishi after looking at Ford future vehicles at the Detroit auto show.
Ford’s stock performance has reflected a wariness about its turnaround plans.
The company’s shares fell almost 3 percent last year, while shares of rival General Motors Corp. gained 62 percent, largely because of investor optimism that its own sweeping restructuring plan has started to show results.