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Ford posts staggering $16.4bn loss

By Mira Oberman in Chicago

January 26, 2007 10:36am

 

FORD Motor Co warned today that its troubles were far from over after it reported a staggering $US12.7 billion ($16.4bn) loss in 2006, the worst in its 103-year history.

The struggling US automaker conceded that it would probably lose the No.2 spot in its home market to Japanese rival Toyota this year as it drastically shrinks its production and sees its market share drop to 14 or 15 per cent from 16 per cent in 2006.

Much of that loss would come from decreased reliance on fleet sales (primarily to rental car companies) which were significantly less profitable than the retail market, Ford chief executive Alan Mulally said.

Sales were also expected to continue to fall as overall demand declined in 2007 and that was expected to put further pressure on automotive pricing, he said.

Huge charges associated with Ford's plan to shut 16 plants in North America and eliminate up to 44,000 jobs accounted for much of its 2006 losses, but Ford also suffered from a drop in sales and a big hit to revenues as consumers shifted away from highly profitable but petrol-guzzling trucks and sports utility vehicles.

The automaker planned to overhaul 70 per cent of its lineup by 2008 to better meet consumer demand and was investing about $US7bn in product development, said Mr Mulally, a former Boeing executive hired by Ford in September.

"We began aggressive actions in 2006 to restructure our automotive business so we can operate profitably at lower volumes and with a product mix that better reflects consumer demand for smaller, more fuel efficient vehicles,'' he said.

"We fully recognise our business reality and are dealing with it. We have a plan and we are on track to deliver.''

Mr Mulally said the company was on track to return to profitability by 2009 but warned that automotive results were expected to worsen before they got better.

Ford stressed that outside the US, its operations in South America and Europe were profitable last year.

The Premier Automotive Group, which includes Jaguar, Land Rover, and Volvo, reported a $US327 million loss in 2006, up from an $US89m loss in 2005.

Mr Mullaly said he expected the struggling group to return to profitability in 2007 and dismissed rumours that Ford was planning to sell Jaguar.

 

http://www.news.com.au/business/story/0,23...8-31037,00.html

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