Ford Motor Co said it no longer expects to meet a long-held goal of returning to profitability in 2009 and would cut production through the remainder of this year to adjust to a slumping US market.Ford shares fell more than 5% in early trading.
In a statement, Ford said rising prices for commodities, particularly steel, and an accelerating consumer shift from larger trucks and sport utility vehicles would make it impossible to meet a key milestone in its efforts to turn around its loss-making North American operations.
Ford Chief Executive Alan Mulally said the No. 2 US automaker now expects to be “about break-even” in 2009, on a pretax basis and before special items, with strong results from Europe and South America.
“Unless there is a fairly rapid turnaround in US business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal,” Mulally said.
The lowered profit forecast could bring new pressure and investor scrutiny on Ford management at a time when billionaire investor Kirk Kerkorian is tendering to buy more of the automaker's shares.
Kerkorian's investment company, Tracinda, said in late April that it had acquired 100 million Ford shares and planned to buy more, raising his stake to almost 6%.
Ford said it now expects to cut second-quarter North American production by another 3% beyond the production cuts it had already announced. The automaker now expects to produce 690,000 vehicles in the second quarter, down 15% from 2007 levels.
Third-quarter production will be down between 15% to 20% from a year earlier at between 510,000 and 540,000 vehicles, while fourth-quarter production is projected to be down between 2 percent and 8 percent at 590,000 to 630,000 vehicles, Ford said.
The planned production cuts will reduce Ford revenues in each of the coming quarters for 2008 since major automakers book sales when vehicles are assembled and shipped to dealers for sale.
Ford shares fell 41 cents to $7.39 in early trading on the New York Stock Exchange. (Reuters)