Ford Motor Company is showing signs of staging a turnaround even as its key competitors General Motors Corporation and Chrysler LLC face bankruptcy.
Ford reported it finished the first quarter of 2009 with a large loss $1.4 billion. The loss, however, was significantly smaller than some analysts expected. In addition, Ford claimed it used less cash in the first quarter, slowing its cash burn that had some observers suggesting that like GM and Chrysler, Ford would eventually need help from the U.S. Treasury.
Ford finished the first quarter with $21.3 billion in automotive gross cash and reiterated that, based on current planning assumptions of 10.5-12 million unit sales a year in the U.S., it does not expect to seek a bridge loan from the U.S. government. U.S. sales through April are running under 10 million units at an annual rate.
Cash outflow, which totaled about -$3.7 billion in the first quarter, will decline through the balance of the year, said Lewis Booth, Ford’s chief financial officer. “We’re comfortable we’ll get through this year,” he said.
In the first quarter, Ford took a number of actions to strengthen its overall weak business, and also started discussions with interested parties regarding the sale of loss-making Volvo, Q1 -$255 million, where it took a $700 million charge based on the difference between book value and the expected ultimate sale price. More write downs are possible. Every Ford Automotive region, except South America, +$63 million compared with a profit of $257 million a year ago, lost money during the quarter, as did its finance subsidiary, Ford Motor Credit. First quarter revenue was $10.2 billion in North America, down from $17.1 billion a year ago. Ford Europe reported a pre-tax loss of $550 million, compared with a profit of $739 million a year ago.
In one of Ford’s ongoing weaknesses that has negative long-term implications, Ford Asia Pacific and Africa’s pre-tax loss was $96 million, compared with a profit of $1 million a year ago. Asia is projected to be the only growth market in the world going forward, and Ford is simply not a player in Asia. (more…)