By Sholnn Freeman
Washington Post Staff Writer
Friday, July 21, 2006; D03
Ford Motor Co. said yesterday that it lost $123 million in the second quarter but narrowed the loss in its North American vehicle operation, which has been hurt by lower demand for pickup trucks and sport-utility vehicles.
In the second quarter last year, the No. 2 U.S. automaker earned $946 million. This year, Ford reported a second-quarter pretax loss of $797 million in its core North American operations, compared with a $907 million loss.
Chairman Bill Ford said the company would accelerate its North American restructuring with cost-cutting to be outlined within 60 days. Ford also will cut production later this year because of weak truck demand.
"We are well aware of the need to act quickly and decisively to reduce our losses and regain our momentum," Ford said.
Ford announced in January that it would cut as many as 30,000 jobs by idling or closing 14 factories, including seven big assembly plants, through 2012.
Ford said its U.S. operations were struggling with the expense of offering big discounts to clear dealer inventories, among other problems. The automaker said more customers are buying passenger cars instead of Ford's high-profit sport-utility vehicles and pickup trucks.
Bill Ford said his company is moving fast to meet growing consumer demand for cars and small SUVs. But he said the speed and magnitude of the market shift put more financial pressure on the company.
Ford is cutting its North American production schedule by 8 percent, or 58,000 vehicles, from last year. The company said it will build fewer trucks so dealers don't get overstocked.
Ford shares fell 14 cents yesterday, to $6.19.
Analysts at Goldman Sachs & Co. described Ford's outlook as bleak. Goldman Sachs blamed signs of consumer weakness, persistent gains by foreign rivals, and stronger pickup truck and SUV models from General Motors Corp. GM accelerated the release of newly designed SUVs, and the success of those models this year has pressured rival vehicles made by Ford and other manufacturers.
Later this year, GM and Toyota Motor Corp. will introduce new pickup designs. The pickup market is one of the most competitive segments of the industry and an important source of profit at Ford. Ford's F-Series pickup truck was the best-selling vehicle model in the United States for many years.
Ford said it lost $162 million in the quarter at its Premier Automotive Group, which includes Land Rover, Jaguar, Volvo and Aston Martin.
There were bright spots in the quarter. On a pretax basis, Ford said it earned $105 million in its European operations and $95 million in South America. Ford reported strong sales of its Ford Fusion, Mercury Milan and Lincoln Zephyr cars in the United States.
Ford said its cash position hasn't eroded substantially. At the end of the second quarter, the company had cash, or cash equivalents, of $23.6 billion, compared with $23.7 billion a year earlier.