Ford Motor Co. said Monday its loss widened to $5.8 billion in the third quarter, weighed down by the costs of its massive restructuring plan aimed at reshaping the company and cutting expenses so it can compete better against lower-cost rivals from overseas.
DEARBORN, Mich. (AP) — Ford Motor Co. said Monday its loss widened to $5.8 billion in the third quarter, weighed down by the costs of its massive restructuring plan aimed at reshaping the company and cutting expenses so it can compete better against lower-cost rivals from overseas.
It was the largest quarterly loss in more than 14 years for the nation’s second biggest automaker, and company officials predicted things would get worse in the fourth quarter as market share drops and Ford pays for further plant closures and restructuring costs.
The July-September performance brings Ford’s losses to $7.24 billion for the first nine months of the year.
Ford’s new chief executive, Alan Mulally, called the latest results unacceptable, but said he was encouraged by Ford’s progress in turning itself around by emphasizing more fuel-efficient vehicles.
“Let’s make it clear. These results are unacceptable. We know where we are with our business and why we’re where we are,” he said in a conference call with reporters and industry analysts.
He said there’s a clear opportunity to return to profitability by building more vehicles that will sell across the globe, increasing productivity and quality, more collaboration with parts suppliers and unions, and accelerating efforts to reduce plant capacity to match lower consumer demand for Ford products.
The company has previously said it would return to profitability in North America sometime in 2009.
Ford also said it plans to restate its earnings for 2001 due to accounting errors involving derivative transactions in its credit company. The restatement is expected to affect financial results from 2001 until the third quarter of this year. Derivatives are manufactured financial instruments based on movements in prices of stocks or other securities and are used to help holders avoid big losses.
The company expected the restatement would improve results for 2002, but said other periods are under study.
Ford’s net loss of $3.08 per share in the third quarter was larger than last year’s third-quarter loss of $284 million, or 15 cents per share.
Revenue fell 10 percent to $36.7 billion from the same period a year ago.
Excluding restructuring costs, the company said it lost $1.2 billion, or 62 cents per share, from continuing operations. Excluding special items in the third quarter of last year, Ford lost $191 million, or 10 cents per share.
Wall Street had been expecting a loss of 61 cents per share before one-time items for the quarter, according to a survey of analysts by Thomson Financial.
Ford shares fell 13 cents to $7.88 in late morning trading on the New York Stock Exchange, where they have traded in a 52-week range of $6.06 to $9.48.
Mulally, a former Boeing Co. executive, took over earlier this month as Ford CEO from Chairman Bill Ford, who is part of the automaker’s founding family.
Dearborn-based Ford’s turnaround plan aims to cut $5 billion in costs by the end of 2008 by slashing 10,000 white-collar workers and offering buyouts to all of its 75,000 unionized employees.
The loss including restructuring costs was Ford’s largest quarterly loss since the first quarter of 1992, when the company lost $6.7 billion due mainly to accounting changes.
Excluding charges, Ford would have lost $2 billion on its North American automotive operations in the latest quarter. It blamed its decline in market share, intense competition, a drop in U.S. and European sales and a market shift away from its high-profit trucks and sport utility vehicles.
The company lost $1.2 billion in North America in the third quarter of last year.
Ford said special charges for the third quarter of 2006 totaled $5.26 billion before taxes. The charges included $2.2 billion to re-value assets in North America and $1.6 billion to decrease the value of Jaguar and Land Rover assets.
Ford also took an $861 million charge for jobs bank benefits and employee separations due to its plans to idle factories in North America, a $259 million charge for continued global personnel reduction and a $437 million charge for the cost of employee retirements that occurred earlier than planned.
The company also reported a $99 million gain due to the release of a reserve from excise taxes in South America due to a recent court ruling.