Ford posts record loss of $12.7 billion
Ford Motor Co. lost a staggering $12.7 billion in 2006, an average of $1,925 for every car and truck it sold and the worst loss in the company's 103-year-history.
The company that invented the assembly line and whose name was a byword for the auto industry warned it will bleed cash for two more years before it has a shot at making money.
Ford's loss, reported Thursday, came amid slumping demand for sport utility vehicles and other gas guzzlers and huge restructuring costs tied in part to the planned closure of 16 plants.
Last year's loss surpassed Ford's old record of $7.39 billion set in 1992.
A fourth-quarter loss of $5.8 billion helped drive up the red ink, which for the year amounted to $6.79 per share versus a profit of $1.44 billion, or 77 cents a share, in 2005.
Although huge, the losses were far from the largest quarterly or annual corporate deficits on record _ Time Warner Inc. reported a $97.2 billion loss in 2002, largely due to new accounting rules about how to value assets. Ford could not rely on accounting rules, however, to explain its total.
Ford's loss also wasn't the worst annual total in the auto industry. General Motors Corp. lost $23.4 billion in 1992, due mainly to accounting rule changes on health care liabilities.
The Dearborn-based company predicted more losses for this year and in 2008, but Ford said its restructuring plan is on track to return to profitability in 2009.
"We know where we are. We are dealing with it and we're on plan," Chief Executive Officer Alan Mulally told reporters and industry analysts in a conference call.
Several analysts said the loss was not surprising, given Ford's high costs and falling market share and sales. Ford's future is cloudy at best, given the deficit that it must overcome, analysts said.
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