New Targeted BuyoutsBy Reuters - Print
Ford is showing some financial life.
NEW TARGETED BUYOUTS
Ford, which posted losses of $2.7 billion in 2007 and $12.6 billion in 2006, has been cutting production capacity to match declining market share and meet the shift in demand for smaller more fuel-efficient vehicles.
The automaker said cost-cuts totaled $1.2 billion in North America, which that helped narrow the pretax operating loss in the region to $45 million, from $613 million a year earlier.
Ford offered buyouts to its 54,000 United Auto Workers-represented employees and will offer only targeted buyouts by plant and vehicle from this point. It did not give a target for the earlier plan or the new targeted buyouts.
"It's really an issue of cutting their way close to profitability in North America," Argus Research analyst Kevin Tynan said. "That, as time goes by, gets harder and harder to do."
Tim Ghriskey, chief investment officer with Solaris Asset Management in New York, said the cost-cutting will create a more profitable company that in time will lead to better sales. He does not own Ford shares, but follows it closely.
Ford cut its North American production outlook for the second quarter by 20,000 vehicles to 710,000, or about 101,000 lower than a year earlier. It has also said that it remains ready to cut production more if demand falls further.
The automaker will cut truck production in North America by 40,000 and increase car production, it said.
Ford also cut its full year forecast for U.S. auto industry sales that includes medium and heavy trucks to a range of 15.3 million to 15.6 million, from 16 million, a move executives tipped during a monthly sales conference call in early April.
Given that sales ran at about a 15.6 million seasonally adjusted annual rate in the first quarter, Ford is not banking on a significant sales rebound the rest of 2008.
The outlook is about in line with more recent expectations from analysts and other automakers.
GM said Wednesday that second-quarter U.S. auto industry sales may be weaker than the first quarter as fuel prices rise, but it still expects a recovery in the second half of 2008.
Ford also said its Ford Motor Credit Co reported net income of $24 million in the first quarter, down from $193 million a year earlier, mainly reflecting a higher provision for credit losses, depreciation on leased vehicles and higher net losses related to market valuation adjustments from derivatives.
Ford shares were up 63 cents, or 8.38 percent at $8.15 on the New York Stock Exchange. Through Wednesday's close on the NYSE, the stock was up 47 percent since a March 17 trough.
(Additional reporting by Ben Klayman; Editing by Gerald E. McCormick and Derek Caney)
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