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Wednesday, 16 January, 2002, 10:39 GMT
Ford fears first loss in a decade
Ford is expected to admit its first annual loss in nearly a decade on Thursday, lending support to its chief executive's plan for wholesale restructuring of the venerable car firm.
Analysts believe the company's net losses for 2001 could reach $5.4bn (�3.74bn; 6.06bn euros), after turning a profit of $3.5bn the year before. The predictions of doom and gloom are perhaps unsurprising after a tumultuous year. For much of 2001 the company appeared to lurch from crisis to crisis. Problems with quality, expensive recalls, and a $2bn loss on a faulty tyre scandal involving tyre maker Bridgestone, led to the abrupt departure of the company's chief executive Jacques Nasser late in the year. Adding to the company's woes last year was a $1bn loss on its stockpile of the precious metal palladium as Ford engineers found ways to avoid using it in catalytic converters and palladium's price fell nearly 75%. Tough times The contrast with its competitors is marked. Everyone lost ground in the difficult economic climate of 2001, and the big three - Ford, General Motors and DaimlerChrysler - all predicted lower earnings for 2001 than in 2000. But while Ford investors are expecting a 50 cents a share loss in the final three months of 2001, General Motors upped its profit estimates from 50 cents to 60 cents for the same period. From the ground up Bill Ford, the company's new boss and a scion of the original Ford family, faces a tough job trying to pull the company around. His plans to cut 35,000 jobs and 16% of capacity, strip four models out of the product line-up and close five plants, will incur a charge in 2002 of $5.7bn, or $4.1bn after tax. Also on the agenda is a sell-off of non-core businesses, which include the Kwik-fit European car repair chain and the US chains Collision Team and Greenleaf, a car recycling operation. If all goes according to plan, the idea is to break even this year and return to profit by the middle of the decade. But that assumes no reduction in overall US automobile demand and a steady 19% market share for Ford - assumptions which has not reassured the more pessimistic analysts. Credit rating agencies are not keen either, with Standard & Poor's dropping its outlook for Ford's debt to "negative" from "stable" and an outright downgrade from Fitch. |
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