Fresh Losses Cast Shadow over Ford Restructure

18 October 2002

Ford Motor Company’s massive new ‘revitalisation plan’ to win back investors did not get off to a good start, as analysts acorded a frosty reception to its latest results.

Although the car giant emphasized better-than-expected operating earnings of $220 million (€226.2m; £141.7m) for the third quarter, it nevertheless posted net losses of $326m, its global auto business falling $243m into the red.

Wall Street jumped on the negatives, with Standard & Poor’s threatening to downgrade the group’s triple-B-plus debt rating by one notch.

In Europe, losses widened from $24m in Q3 2001 to $121m, dragged down by a poor performance at luxury brand Jaguar, expected to report a $500m shortfall this year.

However, Ford’s North American arm performed far better than last year, narrowing losses from $849m to $50m, largely thanks to a turnaround in Ford Explorer sales and a 62% decline in safety recalls.

The most profitable division is finance unit Ford Motor Credit, which boosted earnings by 5% to $408m.

Ford’s turnaround plan involves cutting costs, which are currently higher than at its major rivals. It will shortly unveil a scheme to save $1 billion by the middle of the decade without shedding any further jobs.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff