This summary is based on the first quarter fiscal 2008 earnings call conducted by Ford Motor Co. (F) on April 24, 2008.
Management:
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President and Chief Executive Officer: Alan Mulally
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Executive Vice President and Chief Financial Officer: Don Leclair
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Controller: Peter Daniel
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Treasurer: Neil Schloss
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Director of Accounting: Mark Kosman
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Ford Credit CFO: K.R. Kent
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Director, Investor Relations: Lillian Etzkorn
Key Investors Issues
- Revenue was $43.5 billion, down marginally from $43 billion in 2007.
- Net income was $100 million or 5 cents a share, from a loss of $282 million or 20 cents a share in the prior year.
- Achieved $1.7 billion in cost savings, including $1.2 billion in Ford North America.
First Quarter Highlights
Vehicle wholesale were over 1.5 million units, down 119,000 from the same period in 2007, including 68,000 Jaguar-Land Rover and Aston Martin units, and 51,000 at other operations.
- Revenue was $43.5 billion, down marginally from $43 billion in the prior year with favorable exchange offset by lower volume and lower net pricing.
- Pre-tax results from continuing operations were a profit of $736 million, an improvement of $669 million from 2007, including a $900 million improvement in automotive operations profits, partially offset by lower profits at Financial Services.
- Net income was $100 million or 5 cents a share, from a loss of $282 million or 20 cents a share in 2007 due to strong results at Ford Europe with profits of nearly $740 million and Ford South America earning over $250 million.
- The firm had $28.7 billion of gross cash, down $6.5 billion from year-ago levels, this reduction being part of the plan and largely reflects implementation of the initial part of the VEBA agreement with the UAW.
Operational Highlights:
- The latest competitive survey shows an 8% improvement in quality compared with last year, which puts Ford initial quality in a statistical dead heat with Honda and Toyota.
- The firm has began extensive integration of the global product development and purchasing functions to save time and money by working more closely together on a global basis.
- The Ford Fiesta, the all-new global car, was introduced to great reviews at the Geneva Auto Show and this past weekend in Beijing, the car will be sold in virtually all of the major markets worldwide by 2010.
The firm is in the process of reducing the hourly personnel in the US by another 4,200 as a result of the recent enterprise-wide buyout.
- It also agreed to sell Jaguar-Land Rover to Tata Motors and expect the deal to close during the second quarter.
- It is also continuing the disposition of non-core assets, selling the ACH drive shaft business and Primus Financial Services in Japan and recently announce the sale of the glass business at ACH.
- In addition, the firm introduced Drive One, a grass roots multimedia campaign in the US, using the employees and dealers working together as advocates of the Ford products.
Going forward, the company will continue to right-size the business, including continuing to work with union partners to reduce hourly personnel in North America through buyout offers.
- Upcoming launches include the all-new Ford Flex, the Lincoln MKS, and Ford F-150 in North America, giving a US showroom with 70% new or refreshed models.
- Two new models will help sustain momentum in Europe with the launch of the Ford Kuga in the second quarter and the Ford Fiesta later this year.
Special items were a pre-tax loss of $416 million, including a $223 million charge associated with separation programs in North America, largely related to the hourly separation programs in the US and associated curtailments to the benefit plans.
- In addition, Ford has taken $108 million charge related to the reduction of the dealer base, including a write-off associated with investments in US dealerships.
- It also recorded a $70 million charge as a result of the restructuring of the investment at Ballard.
- Additional charges totaled $13 million which were largely related to personnel reductions in Ford Europe and in Asia Pacific.
Segment Performance:
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Automotive reported a pre-tax profit of $669 million, compared with a pre-tax loss of $226 million during the same period a year ago.
- Volume and mix was $700 million unfavorable primarily due to lower volume and unfavorable mix in North America and lower volume at Volvo.
- Net pricing was $100 million unfavorable, more than explained by decreases in North America and that was partly offset by improvements in Europe and South America.
Exchange was $200 million unfavorable, more than explained by the impact of the weakening of the British pound compared with the euro, and the US dollar compared with European currencies.
- Net interest and related fair market value adjustments were $200 million favorable.
- Other factors were $300 million favorable including improved results from operations in Turkey as well as improved parts profits.
- Warranty expense was about $200 million lower, mainly due to favorable adjustments to Ford Europe warranty reserves reflecting improved quality.
- Manufacturing and engineering cost were about $300 million favorable, more than explained by the continued benefit of the restructuring actions in North America.
- Reductions in manufacturing costs were partly offset by higher engineering expenses.
