Drop in sales hits Ford profits

FORD Motor company said it swung to a loss in the third quarter as sales of sport utility vehicles declined, and chief executive Bill Ford Jr warned of “significant plant closings” to help slash costs in North America.

The quarterly loss, the first for Ford since the fourth quarter of 2003, follows a protracted decline in the company’s American market share and deepening financial woes.

American sales of Ford vehicles are down 1.3% so far this year despite a massive discount program that helped clear inventory of unsold vehicles.

Ford and crosstown rival General Motors, which reported a $1.6 billion (€1.33bn) quarterly loss earlier this week, have seen their margins squeezed by intense competition in the American market and by a dramatic slowdown in sales of midsize and large SUVs, their former cash cows, due to high gasoline prices.

The companies are also struggling with higher costs and a cut in their credit ratings to high-yield, or ‘junk’ status this year.

Bill Ford said on a conference call that Ford, the number two American automaker, was delaying until January a long-awaited restructuring announcement for its North American vehicle operations, which have lost more than $1.4bn before taxes so far this year.

“That plan will include significant plant closings where facilities don’t fit our strategy moving forward,” he said.

Ford reported a third-quarter net loss of $284 million, or 15 cents per share, compared with a profit of $266m, or 15 cents a share, a year earlier.

Excluding special charges, the company lost $191m, or 10 cents a share, a penny worse than the average forecast of analysts polled by Reuters Estimates.

Despite the net loss, Ford remains in the black for the year as a whole, while GM has lost about $3.8bn through the first nine months of the year.