Ford Australia Reports $40m Loss For 2006

[JoeT]

Ford's Annus Horribilis

Ian Porter
25 May 2007
www.smh.com.au

A 50 per cent increase in Federal Government grants has not helped Ford Australia mask the depth of its financial losses in 2006.

The company announced an after-tax loss of $40.3 million for last year. The result was propped up by a $46 million increase in government subsidies, from $91 million in 2005 to $137 million last year.

Ford has been hit hard by the dramatic consumer shift away from large six-cylinder cars to smaller, more fuel-efficient cars such as Toyota's Corolla, which bumped Ford's locally made Falcon from second spot on the sales charts last year.

Falcon sales slumped even further in the first four months of this year, with the nameplate slipping to fifth on the list of top sellers.

A fortnight ago the troubled manufacturer announced it was killing off its flagship limousines, the Fairlane and LTD, due to dwindling sales.

The 2006 result was in sharp contrast to the $148 million profit posted for 2005 and the first loss recorded by the maker since 2001. It is the biggest loss recorded by Ford Australia in 13 years.

From 2004 to 2006, Ford sales dropped by 20,000 vehicles - or 15 per cent.

The result has set a sombre tone for local car makers, with Holden also expected to report a loss for its latest financial year. Holden lost $144 million in 2005 and Mitsubishi $255 million in the year to March, 2006.

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Ford Sees Red Over Petrol Price Hike

Ian Porter
22 May 2007
www.drive.com.au

A loss of $40.3 million for Ford Australia in 2006 showed just how hard the company was hit by the sudden switch by consumers away from the traditional Australian family car when petrol prices went through the roof.

The result was a sharp contrast to the $148 million profit posted for 2005 and it demonstrated the value of the Government's assistance arrangements for the local car industry.

It has also set a sombre tone for the local car makers, with GM Holden and Mitsubishi also expected to report losses for their latest financial years. GMH lost $144 million in 2005 and Mitsubishi $255 million in the year to March, 2006.

The Ford loss was struck after taking into account government grants of $137 million, believed to be mainly tax exemptions granted under the Automotive Competitiveness and Investments Scheme.

The grants totalled $91 million in 2005. They come in the form of import duty exemptions, not cash from the Treasury, and are earned by investing in new products and facilities.

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Ford Reports $40m Loss

NineMSN
21 May 2007
www.ninemsn.com.au

Ford Australia has announced a loss for 2006.

There's an old 'rule' in PR -- you keep your bad news for late on Friday afternoon. Ford Australia kept its bad (but expected) news until late last Friday afternoon -- 5:32pm to be exact.

At that time the carmaker announced a net after-tax loss of $40.3 million for the 2006 fiscal year. The loss compares to an after-tax profit of $148.2 million in 2005.

In a year when large cars and medium SUVs (petrol-engined ones at least) did not perform well, Ford lost both market share and volume. Its sales dropped over 14,000 units to 114,965 vehicles. Market share dropped from 12.7 to 11.9 per cent.

Ford Australia President, Tom Gorman said in the statement accompanying the financials: "This was an extremely challenging year for Ford in Australia. Numerous external factors had an impact on our overall business, including consumer demand moving away from large family sedans, which drove a reduction in our sales volume.

"To counter this shift, we embarked on decisive actions to realign our workforce and better position Ford Australia for the future, which resulted in a significant one-time restructuring cost. However, Ford remains committed to investment in future products," said Gorman.

The "restructuring cost" was not detailed by Ford. The company's net sales revenue in 2006 was in excess of $600m short of 2005's total and the lowest since 2002.



Ford Posts Big Loss

James Stanford
21 May 2007
www.goauto.com.au

Redundancies and sales drop put blue oval in red ink.

Ford Australia has posted its biggest loss since 1993.

The company reported an after-tax loss of $40.3 million for the 2006 calendar year.

The loss came after four years of profit for the Campellfield-based operation, which included profits of $192.3 million in 2004 and $148.2 million in 2005.

Ford Australia said the 2006 loss included both significant amounts of investment for the next-generation Falcon as well as one-off costs associated with redundancy packages following cutbacks at its Geelong and Campbellfield factories.

The company sold 14,175 less cars than it did in 2005 as its market share dropped by 1.2 percentage points to 11.9 per cent.

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Ford Australia President Tom Gorman

[ford&holden]

Not surprising...the cost of Orion and slower sales, I'd expect things to pick once the Mondeo and Orion are released.

[JoeT]

I'm not so confident. The Mondeo & Orion Falcon may pick up sales, but I don't think they will be the great saviours of Ford Australia.

[ford&holden]

Originally Posted by JoeT

I'm not so confident. The Mondeo & Orion Falcon may pick up sales, but I don't think they will be the great saviours of Ford Australia.

Why not? look at the profit figures for Ford AUS prior to this loss. Much better than Mitsubishis and Holdens loss...and they are still around doing fine.
I don't see the big deal. This is expected otherwise you wouldn't see Ford, Holden, MIT or Toyota invest in AUS...

http://www.caradvice.com.au/2822/for...-million-loss/

[VB3.3]

Bean counters get blamed for a lot in the auto industry not all of it fair but we probably have to cop this one. The new international accounting standards don't allow you to capitalise as many costs now, you have to recognise them when you spend the money instead of spreading them out over the life of the car.

Obviously crap sales are hurting but a big part of Holden's losses were VE development costs, so in the coming years they should have bumper profits. All things being equal.

[TDi]

Originally Posted by ford&holden

Why not? look at the profit figures for Ford AUS prior to this loss. Much better than Mitsubishis and Holdens loss...and they are still around doing fine.
I don't see the big deal. This is expected otherwise you wouldn't see Ford, Holden, MIT or Toyota invest in AUS...

http://www.caradvice.com.au/2822/for...-million-loss/

I agree. It's a cycle that all car makers go through. With a new Falcon, Falcon Ute, Territory, Mondeo, Fiesta and a facelifted Focus, 2008 should be a better year for Ford Australia.

[JoeT]

After reading your post in the other thread that Ford Aust may get to produce a 3rd vehicle, it maybe their profitable lifeline if the Orion and Mondeo are slow sellers.

I really do hope Ford Corp is planning to export the next Falcon, just like Holden. They would be crazy if they didn't. Exports are the Aussie industries future.

[JoeT]

Ford's Annus Horribilis

Ian Porter
25 May 2007
www.smh.com.au

A 50 per cent increase in Federal Government grants has not helped Ford Australia mask the depth of its financial losses in 2006.

The company announced an after-tax loss of $40.3 million for last year. The result was propped up by a $46 million increase in government subsidies, from $91 million in 2005 to $137 million last year.

Ford has been hit hard by the dramatic consumer shift away from large six-cylinder cars to smaller, more fuel-efficient cars such as Toyota's Corolla, which bumped Ford's locally made Falcon from second spot on the sales charts last year.

Falcon sales slumped even further in the first four months of this year, with the nameplate slipping to fifth on the list of top sellers.

A fortnight ago the troubled manufacturer announced it was killing off its flagship limousines, the Fairlane and LTD, due to dwindling sales.

The 2006 result was in sharp contrast to the $148 million profit posted for 2005 and the first loss recorded by the maker since 2001. It is the biggest loss recorded by Ford Australia in 13 years.

From 2004 to 2006, Ford sales dropped by 20,000 vehicles - or 15 per cent.

The result has set a sombre tone for local car makers, with Holden also expected to report a loss for its latest financial year. Holden lost $144 million in 2005 and Mitsubishi $255 million in the year to March, 2006.

Click here to continue article