Ford posts $274 million loss for '08

Ford Australia has announced an after-tax loss of $274 million for the 2008 accounting period. This figure, three times the $87 million loss posted the previous year (more here), includes financing costs of $74 million and "special charges" of $313 million.

Among other items (including some amortisation of the FG Falcon development), the special charges comprise one-off items such as $110 million for staff redundancies near the end of last year and $151 million worth of "accounting adjustments for the company's defined benefit superannuation fund". The remaining $52 million charge covers depreciation on "certain long-lived assets" -- plant and equipment, in other words.

Despite the size of the after-tax loss, Ford is confident that the company's fortunes are turning around and points to the improvement in operating loss from $99 million in 2007 to $14 million in 2008 -- a difference of $85 million. With a more lucrative mix of Falcon sales for the year to date, 2009, plus Fiesta gaining ground, Ford anticipates a stronger showing for 2009.

In a press release issued today, the company highlighted the weaker market for new cars during 2008 by drawing comparison between the sales revenue for last year and the year before. In 2008, the company earned $3.29 billion in net sales revenue, a $168 million shortfall against the sales revenue for 2007.

"This was a challenging year as the Australian market was affected by the global economic slowdown, but Ford Australia's underlying business continued to improve with strong new vehicle launches and our continued progress in lowering costs and gaining efficiencies," Ford President Marin Burela was quoted as saying in the press release.

Earlier today, the Carsales Network spoke to Ford's Communications Manager, Sinead McAlary for some further background.

"The key thing is that our underlying business improved in 2008," she said, alluding to the reduction in the operating loss for the year. "It's the special items that take [the loss] up quite significantly."

McAlary explained that there were a range of actions Ford is taking to ameliorate the company's financial position for this year.

"We're continuing to launch new product," she said. "Obviously Fiesta is a significant one for us in this year. We're continuing to increase our market share, and we've actually... put a couple of production days back in, in the month of June. We were meant to have three non-production days and we've actually added those back in, because our sales are moving in the right direction."

Ford has gained market share in 2009, the only local manufacturer to do so, according to the press release.

"We've increased the mix of our local product..." McAlary continued. "We've got a richer mix, if you like, in the private segment -- of our vehicles. Obviously that directly contributes to the health of the business."

On that point, figures provided by Marin Burela at last week's sales briefing to the press indicated that just 4½ per cent of Falcon sales are currently contributed by the entry-level XT variants. Ford is thus earning decent margins from the FG Falcon, relative to the sales volumes. Over 40 per cent of Falcon sales are the 'G6' luxury models and the circa 50 per cent of sales remaining are the lucrative sports-focused 'XR' models.

Burela also said at the time that he could have sold another 300 units of the Territory SUV last month and buyers planning to order a G6E Turbo (pictured) won't be see it delivered until around the end of July. So on the product front, things are looking up for the local manufacturer.

"We are moving our business in the right direction," McAlary concluded.

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