Ford Motor posted a deeper than expected quarterly net loss today, but said it would have sufficient cash to fund its turnaround without seeking government loans, and shares rose in premarket trade.
But the company sees no sign of a recovery yet. It burned through $5.5 billion of cash in its automotive business in the fourth quarter, about in line with what analysts were expecting, even as it underscored the dire environment facing car makers during the recession.
The automaker said it would draw on its available $10.1 billion of credit due to the instability in capital markets and still expects to return to at least breakeven in 2011.
Ford said it substantially cut 1,300 white collar jobs in a restructuring announced in November. Ford Motor Credit, the automaker's finance unit, plans to cut 1,200 jobs, or 20 per cent of its staff, in 2009 and the United Auto Workers will end the jobs bank.
The jobs bank is a contract provision that paid nearly full wages and benefits to union-represented workers even after their jobs were eliminated.
"I think it's by far the most volatile period we've ever seen," chief financial officer Lewis Booth told reporters. "This is unprecedented. We're not seeing any signs of recovery yet."
Still, Booth said Ford was expecting some recovery in the US auto market in the second half of the year and he expected it would be the first region to show signs of a rebound when the global recession ends.
The net loss widened to $5.88 billion, or $2.46 per share, in the fourth quarter, from $3.06 billion, or $1.13 per share, a year earlier.
Ford reported a loss from continuing operations, excluding one-time items of $3.27 billion, or $1.37 per share. Analysts on average expected a loss of $1.23 per share, according to Reuters Estimates.
Ford, which burned through $7.7 billion in the third quarter, had automotive cash of $13.4 billion at the end of the year and liquidity totalled $24 billion. It expects to receive the funds from drawing on the $10.1 billion line of credit on February 3rd.
Booth said that Ford was not drawing on the revolver to fund operations or maintain an adequate cash level, "but because it's prudent to do in this financial market."
The automaker also expects 2009 cash flow to be negative, but significantly better than in 2008, Booth said.
Ford has said it would like a $9 billion line of credit from the US government as insurance against a worsening in the global economy and hopes to receive $5 billion of direct loans from a program to support improved fuel economy.
Reuters