Ford Motor Company yesterday said it hoped to get back to breakeven this year after confirming that heavy restructuring costs helped plunge the business into record losses of $5.5bn (£3.8bn) during 2001.
The world's second largest car maker, which last week announced 35,000 job cuts, recorded its first full-year loss for a decade. Competitive pressures and the admission last week that it had become too complacent meant that, even without the restructuring costs, Ford had fallen to a $782m loss.
The company said 2002 would be a year of transition. It expects a further loss in the first quarter but said the business would move into profitability later this year.
"This was a challenging, difficult year for the Ford Motor Company and our financial performance was unacceptable," said chairman and chief executive William Clay Ford Jr. "As outlined in our revitalisation plan, we are committed to regaining our momentum and getting back on track. The difficult actions we announced last week will focus us on de signing, building and selling the industry's best cars and trucks - and restoring the company's profitability."
Revenues in the year fell by 5% to $162bn. Ford's annus horribilis also included costly recalls, the Firestone tyre crisis, dwindling cash reserves and a falling market share in the US. The troubles resulted in the departure of Jac Nasser as chief executive.
Ford's market share in the US was eroded particularly by General Motors and Toyota, falling from 23.7% to 22.8% over the year.
In Europe the picture was better as the company gained market share. Ford said it expected that momentum to continue into 2002. The European division has been undergoing a broad restructuring of its own for the past two years and moved back into profit, making $424m at the pretax level. Unit sales in Britain improved to 637,000 from 476,000 in 2000.
Ford is facing a cash flow crisis and plans to raise $3bn from the issue of convertible bonds. The company's net cash fell from $4.4bn at the end of 2000 to $1.2bn and Moody's, the credit rating service, reduced its rating on Ford late on Wednesday to Baa1 - its third lowest investment grade. The company has twice cut its dividend in an effort to conserve cash.
Last Friday, Ford announced a sweeping restructuring that includes the closure of three assembly plants in North America and two plants making auto parts. Of the job losses, around 13,000 have already been made, including cuts at plants in Britain where Dagenham ceases car assembly at the end of next month. Ford is taking an exceptional charge in the fourth quarter of $4.1bn to cover the restructuring costs, plus a further $102m charge relating to changes in accounting standards.
Ford plans to reduce the number of cars it produces annually by around 1m units, responding to chronic over capacity in the market. The company is also aiming to raise $1bn this year from the sale of non-core assets, including the Kwik-Fit retail chain.
In North America, the tough competitive environment and higher marketing costs caused a loss in Ford's automotive operations of $916m during the fourth quarter against a profit of $740m a year earlier. Ford was tipped into a fierce price war and into offering zero finance deals following the terrorist attacks on the US in September. Marketing costs during the year became "too high" the company said, and the aim was to reduce them again during 2002. The restructuring has been met with scepticism by analysts but yesterday's results were received more positively - the figures were slightly better than expectations.
