Ford Motor reported a narrower-than-expected loss for the first quarter Friday, and its CEO said he is confident the company will not need the same kind of federal bailout that is keeping its U.S. rivals alive.
Ford posted net losses of $1.4 billion, or 60 cents a share. That compares to a profit of 3 cents a share in the year-ago period.
Excluding special items, Ford (F, Fortune 500) lost $1.8 billion, or 75 cents a share, compared to a profit on that basis of $477 million, or 20 cents a share a year in the first quarter of 2008. Analysts surveyed by Thomson First Call had forecast a loss of $1.23 per share on this basis.
Ford's revenue plunged 37% during the quarter to $24.8 billion, as vehicle sales in the U.S. dropped 43%. But revenue was also better than analysts' forecasts. Wall Street was expecting sales of $22 billion.
0:00 /2:44Ford chief: Plan's working
Still, the latest losses come on top of $30 billion in net losses the company reported from 2006 through 2008.
In addition, the company reported a $1.9 billion pre-tax operating loss on its automotive operations, which brings those losses to just under $40 billion since that core unit started losing money in 2005. And the company expects those losses to continue through at least next year.
But the report also once again showed Ford is in far better shape to weather the crisis in the global auto industry than its two U.S.-based rivals.
CEO Alan Mulally told analysts that the company is still confident it will not need a federal loan unless the economy gets significantly worse, or unless there is an uncontrolled bankruptcy in the industry that disrupts the flow of parts from Ford's suppliers.
Ford had asked the government for up to a $9 billion line of credit last December, but said at that time it didn't expect to need such help unless sales were worse than expected.
While sales have been far worse than the company's forecast at that time, Mulally said the debt restructuring and new union contract that the company completed during the quarter will allow it to continue without federal assistance.
Chrysler LLC is racing to reach deals with unions, creditors and Italian automaker Fiat before a deadline next Thursday that could force it to file for bankruptcy.
0:00 /1:36Ford's competitive disadvantage
General Motors (GM, Fortune 500), which faces its own bankruptcy deadline at the end of May, announced Thursday it is extending shutdowns at 12 of its 15 U.S. assembly plants due to weak sales.
By contrast, Ford announced a modest 10,000 vehicle increase in second quarter production plans Friday. Its total North American production target of 435,000 is still down 36% from year-ago levels, however.
Ford's automotive operations burned through $3.7 billion in cash during the quarter. But the company burned through cash at a much lower rate than in the past two quarters -- Ford burned through nearly $15 billion in the six months prior to the first quarter.
The company was helped by an agreement with the union to use stock rather than cash to pay for future retiree health care costs. In addition, by tapping into $10.1 billion in revolving lines of credit during the quarter, a move announced in February, the overall company was able to end the quarter with $21.3 billion in cash on hand, up $7.9 billion from the end of 2008.
Ford's cash position gives it a cushion to weather the losses the company expects to continue for the rest of this year and next. Ford chief financial officer Lewis Booth added that the company believes the first quarter will be the worst period of 2009 in terms of using cash, and that the burn rate will fall in each of the next three quarters.
Ford said action taken during the quarter to restructure its debt and changes in its labor contract with the United Auto Workers union will allow it to meet its goal to break even or make money on a pre-tax basis on its North American auto operations by 2011.
The company has previously said it expects about $500 million a year in reduced costs due to the changes in the UAW contract, although those full savings will not be seen this year as the changes are phased in.
Ford also expects that its balance sheet restructuring, in which lenders accepted equity in return for about $10 billion in outstanding debt, will save it about $500 million a year, pro-rated for this year.