Ford announces $8.7-billion quarterly loss, goes for major restructuring

24 July 2008

America's second largest automaker Ford Motor Co. posted a second-quarter loss of $8.7 billion as it reduced the value of truck plants and loans to buyers of pickups and sport-utility vehicles by $8 billion.

The net loss of $3.88 a share compared with a profit of $750 million, or 31 cents, a year earlier, Ford said in a statement today. The loss excluding the asset write-downs was worse than analysts had estimated, and the shares fell about 8 per cent in early New York trading.

"Because of deteriorating economic conditions, demand has declined dramatically, especially in North America," said Ford CEO Alan Mulally, who also blamed rising gas prices for the decline.

Excluding costs Ford considers one-time expenses, the loss was $1.38 billion, or 62 cents a share. This was much larger than Wall Street expectations of around 30 cents losses per share. The latest results are a far cry from the first-quarter numbers when Ford had confounded analysts with a $100 million profit. (See: Ford confounds analysts, posts $100 million profit in first quarter)

The company also announced massive restructuring of its product lineup and workforce. CEO Mulally said the company is working toward reducing its salaried workforce by 15 per cent. The company aims to save $5 billion annually, and has managed to reduce costs by $1 billion so far.

He also said the company is now shifting its focus "to bring to the North American market smaller, more fuel-efficient vehicles that people increasingly want."