Ford Has Its Worst Year Ever but Won’t Ask for Aid

DETROIT — The Ford Motor Company, the only Detroit automaker not being propped up by billions of dollars in government loans, said on Thursday that it lost $14.6 billion last year as sales slumped the most in decades, making 2008 its worst year in history.
Still, the company said it had “sufficient liquidity to fund its business plan and product investments.” It finished 2008 with $24 billion in cash on hand but $25.8 billion in debt.

Ford, which says it is financially healthier than its cross-town rivals General Motors and Chrysler, reiterated that it did not need federal aid unless the economy worsened significantly or a competitor filed for bankruptcy protection. It expects to break even or earn a profit, excluding one-time charges, by 2011.

“It’s a very volatile time for all of us,” Ford’s chief executive, Alan R. Mulally, said on a conference call. But, he added, “It’s not our plan at all to access the government’s money.”

Ford lost $5.9 billion, or $2.46 a share, in the fourth quarter alone, compared with a loss of $2.8 billion, or $1.33 a share, in the final months of 2007. Auto sales in the United States plummeted 35 percent in the fourth quarter to levels last seen in 1982. Many would-be buyers were unable to obtain loans, and the recession, which began in December 2007, kept many more people from even setting foot in a dealership. Ford’s shares were down almost 3 percent in afternoon trading.

The months ahead do not look promising. Many economists expect that the economy will continue to contract until July at the very least, but at a slowing pace in the second quarter. That would make this the longest recession since the 1930s, outlasting the two record-holders, the mid-1970s and early 1980s downturns. And the unemployment rate, which jumped to a 16-year high of 7.2 percent in December, is expected to rise even more.

“We still feel that, with the amount of stimulus that’s going on in the U.S. market, that we’ll see some improvement in the second half of this year,” Ford’s chief financial officer, Lewis Booth, said.

Fourth-quarter revenue was $29.2 billion, 36 percent less than the $45.5 billion it took in a year earlier. The company depleted its cash reserves at a rate of $2.4 billion a month.

Excluding special charges, Ford’s loss in the quarter was $1.37 a share. On that basis, analysts surveyed by Thomson Reuters expected a loss of $1.30.

Ford’s full-year loss of $14.6 billion, or $6.41 a share, was more than five times larger than its 2007 loss of $2.7 billion, or $1.38 a share. It is the equivalent of losing about $2,700 on every car and truck sold worldwide and more than the 105-year-old company’s 2006 loss of $12.7 billion, the previous record.

“We faced nearly unprecedented challenges across our global markets,” Mr. Mulally said. “The worldwide economic slowdown, driven by tight credit markets and weak consumer confidence, has shaken the foundation of even the strongest companies in the automotive sector and other industries. Clearly at Ford, the severe economic challenges had a significant impact on our fourth-quarter results.”

To give itself more of a financial cushion while trying to get its restructuring back on track, the company said it planned to draw $10.1 billion more from its available credit lines in the first quarter. This month, the company borrowed $2 billion from funds that are intended for a new retiree health care trust managed by the union.

“Given the instability of the capital markets with the uncertain state of the global economy,” Mr. Mulally said, “we believe it is prudent to draw these credit facilities at this time.”

Ford also said Thursday that the United Automobile Workers union had agreed to end its controversial jobs bank program, which pays factory workers after their jobs have been eliminated. The company is still negotiating the terms of that change.

Chrysler eliminated its jobs bank this week, and G.M. will end its program on Monday.

Together, Chrysler and G.M. have borrowed $13.4 billion from the federal government to avoid bankruptcy. Ford initially said it wanted a $9 billion credit line to tap if needed but changed its position after Congress balked at the companies’ requests. The Bush administration eventually approved taking money from the Treasury Department’s Troubled Assets Relief Program.

The automaker’s financial arm, the Ford Motor Credit Company, reported a net loss of $1.5 billion in 2008, compared with net income of $775 million in the quarter a year earlier. The lender said that it would cut about 1,200 jobs or 20 percent of its work force.

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