Press Release
Ford Announces Third Quarter Earnings for 1996
10/18/96
Ford Earns $686 Million in Third Quarter; U.S. Automotive Profit
Improvement Continues
DEARBORN, Mich., Oct. 16 -- Ford Motor Company
earned $686 million in the third quarter of 1996, up $329 million from
the same period last year, reflecting continued improvement in
U.S. automotive operations, along with another quarterly record from
financial services. Fully diluted earnings were 56 cents per share of
common and Class B stock, compared with 27 cents for the third quarter
of 1995.
The total results include the net favorable effect of two one-time
actions of $37 million, or three cents a share.
"Improvements in our U.S. automotive operations continue," said Alex
Trotman, chairman and chief executive officer. "Outside the U.S.,
results continue to reflect challenges in several key regions,
particularly Europe and South America."
U.S. AUTOMOTIVE OPERATIONS GAIN
For the third quarter, worldwide automotive operations earned $15
million, compared with a loss of $201 million last year. Improved
automotive results in the U.S. were offset partially by increased
losses in other markets.
U.S. automotive operations earned a third-quarter record of $634
million, up $447 million from 1995. Unit volume was up slightly from
last year.
Higher earnings reflect the strong acceptance of new products like the
Ford F-Series and Expedition that improved the mix of products sold
and the continuing focus on cost reductions, particularly material
costs. The results also include a one-time charge of $39 million for
early retirements for U.S. salaried employees.
Outside the U.S., losses from automotive operations were $619 million,
compared with a loss of $388 million last year.
In Europe, Ford lost $472 million, compared with a loss of $320
million last year, reflecting costs associated with launching new
products, adverse vehicle mix and volume, and continued high marketing
costs. In Europe, high- volume launches are largely completed. Ford
continues to focus on cost reductions, and new products are coming to
market that will strengthen the line-up. Among these is the Ka, a new
small car that will compete in a growing segment.
The innovative Ka was developed with high investment efficiency in
about 24 months and is produced in Valencia, Spain. Within the next
month, Ka will go on sale in Europe's major markets. Response from
both dealers and automotive news media has been strongly favorable.
In South America, Ford lost $226 million in the third quarter,
compared with a loss of $102 million in 1995. Most of the losses stem
from Brazil. On Sept. 9, Ford indicated that losses in Brazil in the
second half of 1996 would be larger than those of the first half due
to lower market share and a longer and more costly launch process
following the dissolution of Autolatina. In 1997, Ford plans to
introduce the Ranger pickup and the Ka to the Brazilian market which,
along with the new Fiesta and Escort, will strengthen the product
line.
FINANCIAL SERVICES POSTS ANOTHER RECORD
The Financial Services Group posted record earnings for the third quarter
of $671 million, up from $558 million earned in the third quarter of
1995. The quarterly results include a one-time gain of $76 million
from the sale of assets of USL Capital. Without the one-time gain,
profits from Financial Services still set a third-quarter record.
Ford Credit earned $299 million, compared with $357 million in last
year's third quarter. The decline reflects an increase in credit
losses, consistent with the consumer finance industry.
The Associates reported third-quarter earnings of $230 million, a
record for any quarter. As the majority shareholder, Ford's share was
$186 million. The Associates third-quarter earnings improved 17
percent from the $197 million earned in last year's third quarter.
The USL Capital asset sale and the initial public offering of about 20
percent of Associates First Capital Corporation this year raised more
than $3 billion in cash to further strengthen the Financial Services
Group's balance sheet.
BRIGHTER PROSPECTS AHEAD
"As more efficiencies are realized, automotive results for the fourth
quarter should be stronger than last year, despite expected additional
charges of $300-400 million for early retirement programs," Trotman
said. "We expect sales volumes will be higher and margins will
continue to improve."
"There's still much to do," Trotman said. "We've made solid progress,
and we're becoming a leaner, faster company. As we continue to reduce
costs, and as more high-quality products are launched, automotive
profitability should grow, increasing value for both customers and
shareholders," he added.
"With the recently announced streamlining of our components business
and product development, our senior management can further accelerate
the actions that will build on the momentum to achieve our goals for
quality, cost and speed," Trotman noted.
Ford expects U.S. industry volumes for the full year to be about 15.5
million cars and trucks, up from last year's 15.1 million. In Western
Europe, industry sales for 1996 are expected to be about 14.2 million
units, compared with 13.4 million in 1995.
Looking forward, Ford expects moderate economic growth to continue in
its major markets which will allow for stable industry sales volumes.
SUMMARY OF THIRD-QUARTER 1996 COMPARED WITH THIRD-QUARTER 1995
Overview
- Total earnings were $686 million, compared with $357 million in the
third quarter of 1995.
- Fully diluted earnings were 56 cents per share, compared with 27 cents
per share.
- Worldwide sales and revenues were $34 billion, compared with
$31.4 billion.
- Stockholders' equity was $26.2 billion, compared with $25 billion.
Automotive
- Worldwide automotive operations earned $15 million, compared with a
loss of $201 million.
- Net income from U.S. automotive operations was a third-quarter record
$634 million, compared with $187 million.
- Automotive operations outside the U.S. lost $619 million, compared
with a loss of $388 million last year. In Europe, Ford posted a loss
of $472 million, compared with a loss of $320 million last year.
- Worldwide vehicle unit sales were 1,452,000, compared with 1,435,000
units.
- Combined car and truck share in the U.S. was 24.5 percent, compared
with 24.8 percent.
- Combined car and truck share in Europe was 11.8 percent, compared with
12.8 percent.
Financial Services Group
- Financial Services Group earned a record $671 million, including a
one-time net gain of $76 million related to the sale of assets of USL
Capital. Without the one-time gain, earnings were a record
$595 million. Third-quarter results for 1995 were $558 million.
- Ford Credit earned $299 million, compared with $357 million.
- The Associates earned an all-time record of $230 million, compared
with $197 million.
Automotive Balance Sheet
- Net cash was $5.7 billion, compared with $5.4 billion.
- Cash and marketable securities were $13 billion, compared with
$12.2 billion.
- Debt was $7.3 billion, compared with $6.8 billion.
- Capital spending was $2.4 billion, compared with $2.3 billion a year
ago.
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
Third Quarter Nine Months
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
(unaudited) (unaudited)
Worldwide vehicle unit sales
of cars and trucks
(in thousands)
- United States 884 869 2,891 3,038
- Outside United States 568 566 2,009 1,978
----- ----- ----- -----
Total 1,452 1,435 4,900 5,016
===== ===== ===== =====
Sales and revenues
(in millions)
- Automotive $26,459 $24,437 $ 86,518 $ 82,899
- Financial Services 7,501 6,981 21,640 19,691
------- ------- -------- --------
Total $33,960 $31,418 $108,158 $102,590
======= ======= ======== ========
Net income/(loss)
(in millions)
- Automotive $ 15 $ (201) $ 1,265 $ 2,040
- Financial Services 671* 558 1,977* 1,439
------- ------- -------- --------
Total $ 686 $ 357 $ 3,242 $ 3,479
======= ======= ======== ========
Capital expenditures
(in millions)
- Automotive $ 2,358 $ 2,254 $ 5,926 $ 6,204
- Financial Services 149 76 349 223
------- ------- -------- --------
Total $ 2,507 $ 2,330 $ 6,275 $ 6,427
======= ======= ======== ========
Stockholders' equity at
September 30
- Total (in millions) $26,152 $24,955 $ 26,152 $ 24,955
- After-tax return on
Common and Class B
stockholders' equity 10.5% 5.4% 17.4% 20.9%
Automotive cash and
marketable securities at
September 30 (in millions) $12,960 $12,241 $ 12,960 $ 12,241
Automotive debt at
September 30 (in millions) $ 7,296 $ 6,829 $ 7,296 $ 6,829
Automotive after-tax
return on sales 0.1% ** 1.5% 2.5%
Shares of Common and
Class B Stock (in millions)
- Average number
outstanding 1,183 1,083 1,177 1,049
- Number outstanding at
September 30 1,185 1,090 1,185 1,090
AMOUNTS PER SHARE OF
COMMON AND CLASS B
STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income/(loss) assuming
full dilution
- Automotive $ 0.00 $ (0.19) $ 1.02 $ 1.65
- Financial Services 0.56 0.46 1.64 1.20
------- ------- -------- --------
Total $ 0.56 $ 0.27 $ 2.66 $ 2.85
======= ======= ======== ========
Cash dividends $ 0.385 $ 0.31 $ 1.085 $ 0.88
- - - - -
*Results in third quarter 1996 and nine months 1996 included a gain
on disposition of substantially all of USL Capital's assets
($76 million and $95 million, respectively); results in nine months
1996 included a write-down relating to Ford's investment in Budget
Rent a Car Corporation ($437 million)
**Results in this period were a loss