Citing Solid Position, Ford Posts Loss
Saturday, April 25, 2009
Ford yesterday reported a loss of $1.4 billion in the first quarter but said it has enough cash on hand to continue to refuse government aid as it seeks to become profitable again.
Ford burned through $3.7 billion -- far less than the $7.2 billion it spent in the fourth quarter of 2008 -- and ended the quarter with $21.3 billion in cash.
Unlike General Motors and Chrysler, which have received $19.4 billion in federal loans, Ford is not asking for government help.
And while its crosstown rivals race against deadlines to negotiate stakeholder concessions, Ford has struck a deal with the United Auto Workers and reduced its debt. It also has drawn down the last $10.1 billion from its revolving line of credit.
The company said it is continuing to invest in new technologies and remains on track to meet its goal of breaking even or returning to profitability in 2011.
"During the toughest of times we want to keep investing in new products that people really do want and value, so we come out the other side," Ford chief executive Alan R. Mulally said.
A year ago the company posted a profit of $70 million. But falling U.S. auto sales have since pushed Ford to aggressively restructure and strengthen its finances.
Analysts have been impressed by Ford's efforts. This week, Goldman Sachs upgraded Ford's shares to "buy," propelling the stock to a six-month high. Yesterday, Ford shares jumped 11.4 percent, or 51 cents, to $5.
For months, Ford has worked to distinguish itself from its strapped competitors. This week, those differences have grown more obvious.
GM, for instance, announced that it would shut down 13 assembly plants for weeks this summer to better align its production with weakened demand for new vehicles. Ford said it plans to boost its North American production in the second quarter to 435,000 units, 25 percent more than in the first quarter.
"We're not quite sure where the bottom is," Mulally said in a Bloomberg Television interview yesterday. "But we believe with the stabilization of the banks, freeing up the credit and the stimulus packages we have, both monetary and fiscal, that we're going to see an uptick in the third and fourth quarter."