Ford Motor Company (F) Q4 2005 earnings summary

Executive summary

• FY 2005 net income was $2.024B, down from $3.487B in 2004; automotive pre-tax losses widened to $3.895B, while Financial Services pre-tax income rose to $5.891B.

• Revenue increased to $177.089B from $171.646B; diluted EPS was $1.05 versus $1.73, including a $1.095B pre-tax gain on the Hertz sale.

• Market-share erosion, pricing pressure, higher costs and a $1.3B Jaguar/Land Rover impairment weighed on automotive results; the Way Forward plan targets capacity, workforce and cost reductions.

Financial highlights

• Total sales and revenues were $177.089B, up from $171.646B; net income was $2.024B versus $3.487B, and diluted EPS was $1.05 versus $1.73.

• Automotive sales rose to $153.503B from $147.128B, but operating loss widened to $4.209B from $177M; Financial Services revenue was $23.586B and pre-tax income $5.891B.

• Reported results included $1.382B of net special-item charges, including automotive charges of $2.881B partly offset by the $1.499B Hertz gain and other Financial Services items.

• Operating cash flow was $21.674B consolidated; automotive operating-related cash flow was negative $1.7B, excluding pension/VEBA contributions and tax refunds.

Outlook and guidance

• 2006 planning assumptions: U.S. industry volume 17.0M units and Europe 17.3M; industry net pricing expected slightly negative in both regions.

• Total automotive operations expected to be unprofitable in 2006, with North American operations posting a pre-tax loss; other automotive business units expected to be profitable, subject to risks.

• Financial Services expected to remain profitable but below 2005; Credit managed receivables projected at $140B-$145B, with lower earnings from reduced receivables and higher interest rates.

• About $1B of 2006 pre-tax special charges anticipated, including Way Forward costs and personnel reductions; adjusted automotive cost performance expected favorable at constant volume, mix and exchange.