Summary
Ford Motor Company reported a net loss of $254 million ($0.14 per share) for the second quarter of 2006, a significant downturn compared to a profit of $946 million ($0.51 per share) in the same period of 2005. This loss was primarily driven by the Automotive sector, which incurred a loss of $1.2 billion, impacted by substantial "special items" including $1.75 billion in charges related to the "Way Forward" plan (Jobs Bank benefits and voluntary termination charges) and pension curtailment charges. The Financial Services sector, though profitable, saw its income decrease by $651 million to $646 million due to higher borrowing costs and lower average receivable levels. For the first half of 2006, the company reported a net loss of $1.44 billion ($0.77 per share), a stark contrast to a profit of $2.16 billion ($1.06 per share) in the first half of 2005. The Automotive sector's first-half loss widened considerably to $3.9 billion, heavily burdened by restructuring charges, plant idlings, and pension costs. While Ford Credit's performance remained solid, its contribution decreased significantly compared to the prior year, partly due to the absence of Hertz earnings and higher borrowing expenses.
Key Highlights
- 1Ford Motor Company reported a net loss of $254 million for Q2 2006, compared to a profit of $946 million in Q2 2005.
- 2The Automotive sector recorded a loss of $1.2 billion in Q2 2006, significantly impacted by restructuring charges under the "Way Forward" plan and pension curtailment.
- 3Financial Services sector income declined by 50% to $646 million in Q2 2006, mainly due to increased borrowing costs.
- 4For the first half of 2006, the net loss was $1.44 billion, a sharp decline from a profit of $2.16 billion in H1 2005.
- 5Automotive sector's first-half loss widened to $3.9 billion, driven by significant restructuring and special charges.
- 6Ford Credit's charge-off rates (on-balance sheet and managed) reached five-year lows in Q2 2006.
- 7Credit ratings for Ford and Ford Credit were downgraded by major rating agencies (S&P, Fitch, Moody's, DBRS) during June-July 2006, impacting access to unsecured debt markets.