Ford projects loss of about $6 billion

September 14, 2006|By The Detroit News

DEARBORN, Mich. -- Ford Motor Co. projects that its worldwide automotive operations will lose nearly $6 billion this year, and the company as a whole could lose as much as $9 billion once restructuring costs are factored in, according to internal company forecasts.

A Sept. 6 report under the heading "Automotive Profit Forecast," prepared by Ford Chief Financial Officer Don Leclair's office, projects that Ford's global automotive operations will post a pre- tax loss of $5.6 billion to $5.9 billion, excluding nonrecurring charges. A senior Ford source with firsthand knowledge of the report provided details to The Detroit News.

The projected loss would be a nearly-six-fold increase over Ford's $1 billion pre-tax automotive loss last year and illustrates the depth of the automaker's problems in its core car and truck business.

The figures closely track the projections of analysts with BNP Paribas and JPMorgan Securities who spoke with The News yesterday.

Company spokesman Oscar Suris would neither confirm nor deny the financial projections. "We do not verify the authenticity of any secret or confidential information improperly shared outside the Ford Motor Co.," he said.

The projections surfaced as Ford's board of directors meets in Dearborn to discuss intensifying the pace and scope of the company's turnaround plan. A plan that includes more job cuts and other actions could be announced as early as tomorrow.

According to the internal Ford report, the automaker's struggling North American auto business accounts for most of the projected $6 billion pre-tax loss. Ford's North American automotive operations had a pre-tax loss of $1.6 billion in 2005.

The report indicates that Ford expects to lose money in each of its global markets, with the exception of South America. Even the fast-growing Asia-Pacific region is expected to post a slight loss, though Japan's Mazda Motor Corp., which is controlled by Ford, is expected to be profitable.

When one-time charges related to the company's ongoing restructuring effort are included, Ford's 2006 pre-tax loss could climb to $8 billion - or even $9 billion, according to other internal projections cited by the senior Ford source.

How high the losses climb will depend in part on how many workers take advantage of Ford's buyout offers, which are expected to be expanded as part of the new restructuring plan.

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