What was Ford's financial performance in the first quarter of 2008 compared to the first quarter of 2007?

Ford reported a net income of $100 million ($0.05 per diluted share) for the first quarter of 2008, a substantial improvement from a net loss of $282 million ($0.15 per diluted share) in the same period of 2007. This turnaround was primarily driven by the Automotive sector's improved profitability.

What were the main drivers of the Automotive sector's improved performance?

The Automotive sector's improved performance was mainly due to favorable cost changes totaling $1.7 billion, lower charges for Job Security Benefits and personnel-reduction programs (approximately $600 million), and the non-recurrence of pension curtailment charges. These factors were partially offset by lower retiree health care curtailment gains and less favorable volume and mix.

How did the Financial Services sector perform, and what impacted its results?

The Financial Services sector's pre-tax income decreased by $226 million to $67 million in Q1 2008. The primary reasons for this decline were a higher provision for credit losses, increased depreciation expense for leased vehicles due to used vehicle market depreciation, and higher net losses from derivative valuations. These were partially offset by lower costs from business transformation initiatives and improved financing margins.

What is the status of the Jaguar Land Rover divestiture?

Ford entered into a definitive agreement in March 2008 to sell its Jaguar Land Rover operations to Tata Motors for approximately $2.3 billion. The assets and liabilities of these operations were classified as held for sale, and an impairment charge of $421 million was recorded in the first quarter of 2008 related to this planned disposal. The sale was expected to be completed in the second quarter of 2008.

FORD MOTOR CO 10-Q Quarterly Report Q1 FY2008

Summary

Ford Motor Company reported a net income of $100 million ($0.05 per diluted share) for the first quarter of 2008, a significant improvement from the $282 million loss ($0.15 per diluted share) in the same period of 2007. This turnaround was driven by a strong performance in the Automotive sector, which saw a pre-tax income of $253 million compared to a loss of $339 million in the prior year. Key factors contributing to this improvement included favorable cost changes, lower charges related to employee separation programs, and the non-recurrence of certain charges. Despite the positive net income, the Financial Services sector experienced a decline in pre-tax income, primarily due to an increased provision for credit losses. However, the company faces ongoing challenges. The Automotive sector's overall results were positively impacted by the sale of Jaguar Land Rover, but the ongoing operations reported lower sales volumes and a slight decrease in market share in key regions. The company also noted significant macroeconomic headwinds, including a declining housing market, rising oil prices, and tightening credit conditions, which are expected to impact vehicle sales, particularly in North America. Ford also announced plans for significant cost reductions and restructuring to navigate these challenges and achieve future profitability.

Key Highlights

1Reported a net income of $100 million for Q1 2008, reversing a net loss of $282 million in Q1 2007.
2Automotive sector swung to a pre-tax income of $253 million from a pre-tax loss of $339 million, driven by favorable cost changes and lower employee separation charges.
3Financial Services sector pre-tax income decreased by $226 million to $67 million, mainly due to a higher provision for credit losses.
4Total automotive sales increased slightly by 1% to $39.1 billion, while wholesale volumes decreased by 3%.
5Jaguar Land Rover operations were classified as held for sale, with an agreement to sell to Tata Motors for approximately $2.3 billion.
6Automotive sector's net cash position decreased significantly, reflecting changes in gross cash balances and operations.
7The company anticipates full-year 2008 pre-tax results for its Automotive operations to be a loss, despite expected improvements over 2007.

FORD MOTOR CO Quarterly Report for Q1 Ended Mar 31, 2008

Summary

Key Highlights

Frequently Asked Questions