Ford posts unexpectedly narrow loss

Ford losses smaller than expected
By John Reed in London and Bernard Simon in Toronto
Copyright The Financial Times Limited 2009
Published: April 25 2009 03:00 | Last updated: April 25 2009 03:00
http://www.ft.com/cms/s/0/30ff7bea-3130-11de-8196-00144feabdc0.html


Ford Motor reported a smaller-than-expected first-quarter loss and said its cash burn had slowed, evidence that it is starting to gain from the shake-out in US automaking.

Ford's share price surged an initial 19 per cent after it reported a $1.4bn net loss, and again said that it would not need to join General Motors and Chrysler in seeking emergency aid from the US government.

Detroit's second-largest carmaker has increasingly sought to distance itself from its two domestic rivals in public statements and marketing campaigns.

"We are positioning Ford to survive the current downturn and profit as auto sales recover," said Alan Mulally, Ford's chief executive.

He told the Financial Times that Ford was reaping the benefits of its relatively more secure financial position through a more stable market share in the US, a higher market share in Europe and improved pricing of its cars.

Ford's first-quarter loss amounted to $0.60 a share, less than half analysts' average estimate of $1.24 a share. Ford reported a profit of $686m a year ago.

Patrick Archambault, industry analyst at Goldman Sachs, said a $600m advance in Ford's North American prices was the main reason it beat analysts' estimates, and called the company "a net beneficiary of the significant structural shifts in the industry".

Ford said it still expected to break even on a pre-tax basis in 2011, excluding special items, and that it was on track to meet or beat other financial targets.

However, Ford warned that total industry sales this year in its core US market were likely to be at the lower end of its assumed range of 10.5m to 12.5m vehicles.

Mr Mulally also warned of the danger that the "uncontrolled bankruptcy of a major competitor or a major supplier" could disrupt Ford's operations.

Some analysts have predicted that Ford will still need access to taxpayer funds this year to stay afloat.

The carmaker burned through $3.7bn of cash in the quarter, significantly less than the $5.5bn it burned through in the last quarter of 2008.

Ford said it expected the cash outflow to keep slowing through this year as it continued to cut costs aggressively.

Ford lost money at its European arm and at Volvo, the Swedish premium brand it is seeking to sell.

It took an impairment charge of about $700m reflecting the difference between Volvo's book value and estimated fair market value.

The company would not comment on a timetable for completing the sale or the price it is seeking for the brand, which it bought for $6.5bn in 1999, but which industry sources say it is prepared to sell for $1bn- $2bn.

Merrill Lynch raised its rating on Ford to "buy" and set a $7.50 price target for the company.

Ford's shares gained 11.3 per cent to close the day at $5yesterday.