Ford Motor slashed its full-year earnings outlook yesterday and said it was planning more job cuts and belt-tightening measures to offset its slumping US vehicle sales.
The second-largest US automaker, which has warned that its core automotive operations may not be profitable this year, said its full-year profit outlook was being cut to a range of $1.00 to $1.25 per share, excluding items, down from a previous forecast of $1.25 to $1.50 per share.
The 2005 earnings warning from Ford was its second so far this year. It follows a 12-month decline in the company's US vehicle sales and comes as Detroit's automakers, led by General Motors, face some of their biggest challenges in decades.
In addition to the elimination of 2005 bonuses for salaried management employees worldwide, Ford said it was suspending 401(k) matching grants for its salaried workers and also planning to cut another 5 per cent, or about 1,700, of its salaried jobs in North America.
The job cuts are in addition to 1,000 salaried positions Ford said it was targeting for cuts in April. "We're taking steps to immediately reduce our salaried-related costs," Chief Financial Officer Don Leclair said in a statement. "Challenges continue to mount," said Leclair, referring especially to Ford's North American automotive operations.
Both Ford and its larger rival GM have been reeling this year from a dramatic slowdown in sales of their mid- and large-size sport utility vehicles.
The fuel-thirsty SUVs, former profit engines for Detroit's automakers, have entered the slow lane of the US vehicle market as consumer sentiment changes in the face of high gasoline prices.
Ford and GM, corporate giants wounded by a cut in their credit ratings to non-investment grade or "junk" status just last month, have been losing sales and US market share even as more nimble Asian rivals report strong gains.