DETROIT (April 24, 2009) — Ford Motor Co., the only U.S. auto maker operating without federal bailout loans, burned through $3.7 billion in cash during the first quarter in posting its fourth straight quarterly loss.
Ford slowed the burn rate from the fourth quarter of 2008, when cash declined by $5.5 billion. Ford finished the quarter with cash reserves of $21.3 billion, up from $13.4 billion at the end of 2008. The company drew down a $10.1 billion line of credit in the first quarter.
The net loss for the quarter was $1.4 billion, compared with net income of $70 million a year earlier. The pretax operating loss, excluding special items, was $2 billion, compared with pretax income of $686 million during the year-ago period.
Ford, which analysts estimate needs $9 billion to $10 billion in cash on hand to fund operations, is trying to avoid a federal bailout as U.S. auto sales remain at 27-year lows. Detroit rivals Chrysler L.L.C. and General Motors Corp. are surviving on $17.4 billion in U.S. loans and are on the brink of bankruptcy.
"Our results in the first quarter reflected the extremely difficult business environment and weak demand for autos around the world," CEO Alan Mulally said in a statement.
Ford´s revenue plunged as first quarter U.S. vehicle sales fell 44.4 percent amid a recession that´s now the longest since the Great Depression. Ford said revenue declined to $24.8 billion from $39.2 billion.
First may be worst
CFO Lewis Booth said that Ford expects its first quarter cash burn to be the highest for the year.
"We can expect to see continued improvements in cash during the year," Booth said. "We expect to see sequential improvement."
Booth most of the reduction in cash burn came from structural cost cutting. He also said the company is seeing higher vehicle transaction prices. Ford expects some improvement in the U.S. economy in the second half of the year as well, he said.
Booth said Ford expects to have sufficient cash for the remainder of 2009, despite a "very, very difficult environment."
"We´re certainly confident of getting through this year," he said.
Ford reiterated that it was on track to at least break even in 2011. The company hasn´t had an annual profit since 2005, and last year´s $14.7 billion net loss was a record.
Ford´s automotive operations lost $1.9 billion before taxes in the latest quarter. The North American unit lost $637 million before taxes. Ford of Europe posted a pretax loss of $550 million.
The $3.7 billion first quarter cash burn figure included a $500 million payment to Ford Motor Credit for subvented financing.
Ford announced earlier this month it had slashed its automotive debt by $9.9 billion, or by about 38 percent, to bolster its finances amid the industry downturn.