Summary
Ford Motor Company reported a significant net loss of $8.7 billion for the second quarter of 2008, a sharp decline from the $750 million net income reported in the same period of 2007. This loss was heavily impacted by a substantial $5.3 billion fixed asset impairment charge in the North America automotive segment due to a shift in consumer preferences towards smaller, more fuel-efficient vehicles, higher commodity costs, and lower-than-anticipated industry demand. The financial services sector also contributed to the losses with a $2.1 billion impairment charge related to the operating lease portfolio, driven by declining used vehicle auction values. Revenue declined year-over-year for both the automotive and financial services sectors, reflecting challenging market conditions. Despite the substantial quarterly loss, Ford completed the sale of Jaguar Land Rover for $2.3 billion, which provided a cash inflow and helped manage liquidity. The company also focused on cost-reduction initiatives and maintaining liquidity through large gross cash balances and committed credit facilities. However, the significant net loss and ongoing economic headwinds raise concerns about Ford's near-term financial stability and its ability to return to profitability.
Financial Highlights
17 data points| Revenue | $41.10B |
| Cost of Revenue | $39.99B |
| Gross Profit | $1.11B |
| SG&A Expenses | $7.30B |
| Operating Expenses | $50.34B |
| Operating Income | -$8.64B |
| Interest Expense | $2.44B |
| Net Income | -$8.70B |
| EPS (Basic) | $-3.89 |
| EPS (Diluted) | $-3.89 |
Key Highlights
- 1Reported a net loss of $8.7 billion for Q2 2008, a substantial decrease from a $750 million net income in Q2 2007.
- 2Recorded a significant $5.3 billion pre-tax impairment charge on long-lived assets in the North America Automotive segment due to market shifts and economic conditions.
- 3The Financial Services sector incurred a $2.1 billion pre-tax impairment charge on its North America operating lease portfolio due to declining used vehicle auction values.
- 4Completed the sale of Jaguar Land Rover for $2.3 billion in cash, recognizing a pre-tax loss of $106 million as part of the transaction.
- 5Automotive sector revenues decreased by 8% to $37.0 billion compared to $40.1 billion in the prior year's quarter.
- 6Ford Credit's charge-offs (net of recoveries) increased significantly to $246 million from $125 million year-over-year, with loss-to-receivables ratios rising.
- 7Total Automotive sector debt was $26.5 billion, and net cash (gross cash less total debt) significantly decreased to approximately $100 million from $7.6 billion at the end of 2007.