Ford today reported a 2006 full-year net loss of $12.7 billion, or $6.79 per share — the company's worst year in over 100 years of operation. Excluding special items, Ford's 2006 full-year after-tax loss from continuing operations totaled $2.8 billion, or $1.50 per share. This compares to year-ago earnings from continuing operations of $1.9 billion, or $1.00 per share, excluding special items. "Special items" include nearly $10 billion in restructuring efforts and fixed asset impairments.

Full-year sales and revenue for 2006 was $160.1 billion, compared to $176.9 billion a year ago. For the full year, Ford’s worldwide Automotive sector reported a pre-tax loss of $5.2 billion, compared to a pre-tax loss of $993 million a year ago. For the fourth quarter, Ford’s worldwide Automotive sector reported a pre-tax loss of $2.5 billion, compared to a pre-tax loss of $109 million a year earlier.

For 2006, Ford’s North America Automotive operations reported a pre-tax loss of $6.1 billion, compared to a loss of $1.5 billion in 2005. For the year, North America’s sales totaled $69.4 billion, compared to $80.6 billion a year ago. For the fourth quarter, North America Automotive operations reported a pre-tax loss of more than $2.8 billion, compared to a pre-tax loss of $217 million in 2005.

Ford today reported a 2006 full-year net loss of $12.7 billion

January 25, 2007
Tom Krisher
Associated press
DEARBORN, Mich. — Ford Motor Co. lost $5.8 billion in the fourth quarter amid slumping sales and huge restructuring costs, pushing the automaker’s deficit for the year to $12.7 billion, the largest in its 103-year history.

The annual loss reported Thursday surpassed its previous record of $7.39 billion set in 1992. The 2006 loss amounted to $6.79 per share versus a profit of $1.44 billion, or 77 cents a share, in 2005.

It was far from the largest quarterly or annual corporate loss on record — Time Warner Inc. reported a $97.2 billion loss in 2002, largely due to new accounting rules about how to value assets. Ford could not rely on accounting rules, however, to explain its staggering total, which represented a loss of $4,380 on each car or truck it sold in 2006.

Ford’s loss also fell short of the biggest annual deficit in the auto industry. General Motors Corp. lost $23.4 billion in 1992.

Dearborn-based Ford predicted more losses for this year and in 2008, but said its restructuring plan is on track to return to profitability in 2009.

“We know where we are. We are dealing with it and we’re on plan,” Chief Executive Officer Alan Mulally told reporters and industry analysts in a conference call.

The company, which lost $6 billion on North American operations alone, said it expects to burn up $10 billion in cash to run its business through 2009 and spend another $7 billion to invest in new products.

The fourth-quarter loss was the worst final-quarter loss in Ford’s history and its second-worst quarterly performance. Ford lost $6.7 billion in the first quarter of 1992, due mainly to accounting rule changes on health care liabilities.

Excluding special items, Ford lost $1.50 per share in all of 2006, worse than Wall Street predicted. Fourteen analysts polled by Thomson Financial expected a loss of $1.35 per share for the year, excluding special items.

Its shares rose 16 cents, or 1.8 percent, to $8.36 in midday trading on the New York Stock Exchange.

Ford, faced with increasing competition from overseas rivals such as Toyota Motor Corp., is banking on the restructuring to pull it through the next two years. Mulally, hired from aerospace giant Boeing Co., is leading the drastic efforts to turn around the company.

Ford mortgaged its assets to borrow up to $23.4 billion to pay for the restructuring and to cover losses expected until 2009. About 38,000 hourly workers have signed up for buyout or early retirement offers, and Ford plans to cut its white-collar work force by 14,000 with buyouts and early retirements.

Chief Financial Officer Don Leclair said Ford expects favorable results from its automotive business in 2007.

But because of interest on its debt “total automotive results are expected to be worse in 2007 than in 2006,” he said.

Leclair said the company finished 2006 with $33.9 billion in cash available for its automotive operations, including $12 billion that it borrowed in December. He said the company could tap into nearly all of that cash to fund its operations.

The company is on target, though, to achieve its goal of cutting $5 billion in annual costs by 2008 compared with 2005 levels, Leclair said.

Mulally said Ford will continue to review its costs, looking for more cuts as it gains efficiencies from building more cars worldwide on fewer frames in more efficient factories.

“The more I review the details, the more confident I am that we can continue that cost reduction through 2009 and beyond,” he said.

Ford, which relied on truck and sport utility vehicle sales for much of its profits, was hurt last year as $3 per gallon gasoline sent consumers fleeing to smaller, more fuel-efficient vehicles. Ford has seen its market share deteriorate in recent years. At the same time, Toyota has seen its U.S. sales rise, beating Ford out for the No. 2 sales spot in July and November.

Ford has rolled out or will introduce several new or updated products during 2007, including the Edge crossover, new F-series Super Duty pickups, a redesigned Focus small car and an updated Five Hundred larger sedan.

But many analysts are skeptical that the products are strong enough to turn the company around.

Mulally said earlier this month that Ford’s restructuring plan remained “absolutely the right thing to do.’’

Ford said that special items associated with restructuring costs totaled $9.9 billion for the year as the company continues efforts to shrink itself to match reduced demand for its cars and trucks.

Sales for the fourth-quarter fell to $40.3 billion from $46.3 billion a year ago, while annual sales dropped to $160.1 billion from $176.9 billion in 2005.

At a crossroads
We began this test with high hopes from the handsome newcomer. Ford needs this vehicle. Ford wants you to want this vehicle. But it's hard to make a compelling argument for the Edge when compared to traditionally styled stalwarts like the Honda Pilot, Toyota Highlander, or even Ford's own Explorer. Size, price and capabilities of the Edge are, at best, on par with those vehicles.

It gets even harder to defend the Edge when it's compared to the Hyundai Santa Fe, Mazda CX-7 or Toyota RAV4. Each is less expensive, more fun to drive and generally more fuel-efficient.

Although we like Ford's newest crossover, the edgiest thing about it turns out to be its name.

If you fancy owning Aston Martin, you'd better get your hand down the back of the sofa pronto to find £500 million.

That's the asking price Ford wants - or more accurately desperately needs - for its flagship sporting brand.

The sell-off of Aston will help bolster ailing Ford, which lost more than £6.4 billion in 2006.

If you're tempted, you'd better hurry - investment bank UBS has decided today is the deadline for offers.

UBS is managing the sell-off, and in pole position to win the sale at the moment is James Packer, who just happens to Australia's richest man.

The lucky winner of the Aston auction will be announced later in the week.

DETROIT (Reuters) -- Ford Motor Co.'s U.S. sales will likely fall 20 percent in January due to lower fleet sales, the automaker's sales analyst said today.

At a briefing on Ford's 2007 sales outlook, George Pipas told reporters the automaker's fleet sales would fall 40 percent in January, driven by a 60 percent decline in sales to car rental agencies.

"This is not going to be the biggest decline in fleet sales," Pipas said, adding there would be double-digit declines in fleet sales every month this year.

Pipas also expected Ford's fleet sales to be "just north of 700,000" in 2007, down from 900,000 units a year earlier, because of a planned reduction in sales to daily rental companies.

The sales analyst expected retail sales in January to be about flat compared with a year ago, but sales of high-margin F-series pickups could see a decline.

"It's going to be tough for F series to maintain last year's level," Pipas said.

Ford's announcement came just a day before automakers are expected to report U.S. January sales.

General Motors also said last week that it would cut daily rental sales by 120,000 vehicles in the first half of 2007, with almost a third of the reduction in January.

The cuts are part of an effort to move away from low-margin sales as U.S. automakers try to recover from billions of dollars in losses and shrinking U.S. market share.

Ford enters 2007 poised to lose its No. 2 spot in the U.S. market to rapidly growing Toyota Motor Corp. and undertaking a painful restructuring under a new CEO that could take several years to show results.

"Our aim is to stabilize our retail market share," Mark Fields, Ford's president of the Americas, told reporters.

Ford wants to stabilize its retail market share at about 11 percent, he said.

Ford has said its target is to hold its overall share of the U.S. light vehicle market at 14 percent to 15 percent over the coming two years, down from over 17 percent in 2006.

Pipas said it was possible Ford's overall U.S. market share would dip below 14 percent during some months this year.

"There is some seasonality in our market share ... We don't tend to do as well in winter," Pipas said.

Ford lost a record $12.7 billion in 2006, as high gasoline prices and interest rates drove consumers away from pickups and SUVs, the category that accounted for most of its sales and profits.

Pipas today said he expected industry sales of pickups to remain flat at about 2.2 million to 2.3 million in 2007.

Overall, Ford expects 2007 auto industry sales of about 16.4 million light vehicles in the United States, down from about 16.5 million in 2006.

Ford is in the early stages of a four-year turnaround plan that includes closing 16 plants and cutting up to 45,000 jobs.

Ford has also cut its first-quarter production target in North America to 740,000 vehicles, a 15.5 percent decline from a year earlier.

Ford shares slipped 7 cents, or less than 1 percent, to $8.13 on the New York Stock Exchange in late afternoon trading.

Ford today starts the delicate process of choosing a new owner for Aston Martin.

As of today’s deadline, up to six bidders are understood to have presented offers for the Ford-owned British sports car company, valuing Aston at between £500 million and £550 million ($981 million to $1.08 billion), according to sources familiar with the bid process.

Because of the detail involved in assessing each bid, Ford is unlikely to name the winning bidder for at least one month. Even then, according to sources, the bid process could enter a third phase if two or more bidders are neck-and-neck.

Offers are understood to have come from Canadian-based supplier Magna International, British buyout specialists Doughty Hanson, the Syrian property millionaire Simon Halabi, and a consortium including the Australian media tycoon James Packer. The identity of the two further bidders remains unknown.

Although Aston Martin CEO Ulrich Bez is believed to harbor a keen interest in continuing to manage the company, regardless of ownership, it was unclear whether he was aligned with any of the bidders.

French luxury goods maker LVMH Moet Hennessy Louis Vuitton SA — better known as just Louis Vuitton — has won an auction to acquire Aston Martin from Ford, according to a German news report.

The news will appear in weekly auto magazine Autobild tomorrow, according to MarketWatch, which obtained an advance copy of the article. The Autobild report cites well-placed but anonymous sources.

Earlier this week, bidding ended for Aston Martin, which has been up for "auction" since August. Ford is selling the successful sports car company in order to raise much-needed capital.

Ford will retain a 15 percent stake in the company, according to the report. No details on the sale price were given, but a report by Britain's Sunday Times in December put valuation as high as $1.2 billion.