Ford reports $123 mn Q2 loss as SUV sales slump

DETROIT: Ford Motor, which has been working to slash costs and stem market-share losses, on Thursday posted an unexpected second-quarter loss as sales of large sport utility vehicles (SUVs) slumped on higher US gasoline prices and it took charges for employee buyouts.

The No 2 US automaker cut its third-quarter production target in North America, and Ford chairman and chief executive Bill Ford Jr said the company will accelerate its turnaround efforts. Ford’s restructuring programme already includes closing 14 plants and cutting up to 30,000 factory jobs in North America.

In a conference call following the results, Ford said the company is on track to reduce capacity by 15% this year and is committed to achieving profitability in its key North American operations by ’08. “We remain committed to this goal, we have seen improvement,” Mr Ford said on a conference call with analysts. “I am encouraged by what has been going on behind the scenes.

But the external factors I have outlined are not going to get any easier, which means we need to go farther and faster.” Ford said it had a second-quarter net loss of $123m, compared with a profit of $946m a year ago. The net results included one-time costs of $486m before taxes, related to buyouts in North America.

The loss from continuing operations was 3 cents a share, compared with Wall Street analysts’ average expectations for a profit of 14 cents a share. Revenue fell to $42bn in the second quarter, down from $44.6bn a year earlier as US vehicle sales fell 7% in the quarter.

Ford has been hit hard by high gasoline prices that have caused consumers to shift from sport utility vehicles and large trucks to smaller cars — an area of relative weakness for Ford. The decline in sales prompted Ford to cut its third-quarter production target in North America, mostly on the truck side, by 5.6% to 670,000 vehicles.

Ford said earnings at its finance arm, which makes loans to its customers, fell 40% to $441m, partly reflecting its own higher borrowing costs. Ford said the pretax loss in the second quarter for its core automotive operations widened to $808m, excluding special charges, compared with a loss of $245m a year earlier.