DETROIT (Reuters) - Ford Motor Co reported a record $14.6 billion full-year loss on Thursday but said it would have the cash to survive the worst downturn in auto sales in decades without a U.S. government bailout.
Ford plans to cut some 2,500 white-collar jobs and draw down its remaining credit line after burning through $5.5 billion of cash as global auto sales plunged.
The automaker posted a deeper-than-expected $5.9 billion fourth quarter net loss. Ford has reported net losses totaling nearly $30 billion over the past three years.
For the year, Ford burned through $21 billion but said it expected that it would be able to better conserve cash in 2009 if U.S. sales stabilize in the second half as it expects.
The No. 2 U.S. automaker also said it would draw down $10.1 billion remaining on its credit line and defer $2 billion in payments pledged to a trust aligned with the United Auto Workers to add to its cash position in the first quarter.
“We took this action because of our growing concerns about the instability of the capital markets,” Ford Chief Executive Alan Mulally told analysts in a conference call.
Ford shares were down 3 percent in afternoon trade.
Analysts lauded Ford under Mulally with having the foresight to borrow heavily in 2006, before credit markets shut down and auto sales plunged in 2008.
“They’re doing what they can to take costs out but the other side of the equation -- sales -- has got to recover,” said Erich Merkle, an independent auto analyst.
Ford’s captive credit arm, Ford Motor Credit, said it would cut 1,200 jobs, or 20 percent of its staff. For its auto operations, Ford said it had almost completed 1,300 white-collar job cuts that it began in November.
Ford said the UAW had also agreed to suspend its jobs bank, dropping a program that had guaranteed nearly full wages and benefits for workers after their jobs were eliminated. Ford had about 1,500 UAW workers in its jobs bank at the end of 2008.
Suspending the jobs bank had been a condition imposed by the federal government for the $17.4 billion bailout of Ford’s rivals General Motors Corp and Chrysler. GM and Chrysler both had previously announced an end to the program.
Overall, Ford cut its North American auto workforce by 5,000 jobs in the fourth quarter to 75,200, most of that in its hourly workforce. The Ford Credit, and salaried job cuts will be reflected in 2009 results.
NO SIGNS OF RECOVERY
“I think it’s by far the most volatile period we’ve ever seen,” Chief Financial Officer Lewis Booth told reporters. “We’re not seeing any signs of recovery yet.”
Still, Booth said Ford was expecting some recovery in the U.S. market in the second half of the year and he expected it would be the first region to show signs of a rebound.
Ford’s net loss widened to $5.88 billion, or $2.46 per share, in the quarter, from $2.8 billion, or $1.33 per share, a year earlier.
Ford Motor Credit, traditionally a source of profit, slipped to a $372 million quarterly loss on credit-related charges, derivatives losses and lower loan volumes.
Volvo, a the Swedish luxury brand Ford is looking to sell, posted a forth-quarter loss of $736 million on a pre-tax basis, down from a break-even position a year earlier. Ford offered no details on the sale process.
Executives said the Volvo review would take some time and the brand’s management is focused on fixing the business.
Ford ended 2008 with $13.4 billion cash. It said it would receive the $10.1 billion from its line of credit on February 3.
Ford has asked for a $9 billion line of credit from the U.S. government as insurance against a worsening in the global economy. It also expects to receive $5 billion of direct loans from a U.S. program to support improved fuel economy.
Industry-wide U.S. auto sales fell 18 percent in 2008 and are expected to fall for a fourth consecutive year in 2009, ratcheting up pressure on automakers in the world’s largest and most profitable market.
Ford remains more optimistic than most industry forecasts for 2009, even though it cut its industry-wide U.S. sales forecast to a range of 11.5 million to 12.5 million units including medium and heavy trucks from the range it used in Congressional testimony last year.
The automaker trimmed its first quarter production plan by 30,000 units in North America to 400,000 units, a cut that will add to the considerable pressure on its supply base.
Ford does not contemplate a cash injection for former parts unit Visteon Corp, whose stock has fallen to 16 cents per share.
Additional reporting by Kevin Krolicki and Poornima Gupta; Editing by Derek Caney
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