Ford Motor Co., the world's third- largest automaker, posted a second-quarter loss of $8.7 billion and said it will convert three truck factories to produce small cars as rising gasoline prices sap US truck sales. The net loss of $3.88 a share compared with a profit of $750 million, or 31 cents, a year earlier, Ford said in a statement distributed on Thursday at its Dearborn, Michigan, headquarters. The figure included $8 billion in pretax writedowns of North American plants and assets of Ford Motor Credit Co. The shares fell in early New York trading. The results mark the sixth loss in eight quarters under Chief Executive Officer Alan Mulally, recruited from Boeing Co. to restore growth at the automaker. Gasoline on its way to $4 a gallon and plunging sales of F-Series pickups forced Mulally in May to abandon his target of returning to profit in 2009. Ford said it would convert truck plants in Michigan, Kentucky and Mexico into making cars. The Mexican plant conversion was announced previously. Excluding costs Ford considers one-time expenses, the loss was $1.38 billion, or 62 cents. Ford said it had $26.6 billion in automotive cash at the end of the quarter, down $10.8 billion from a year earlier. Ford had pretax writedowns of $5.3 billion for its North American auto operations and $2.1 billion for vehicle leases at Ford Credit. The company said in the statement the writedowns stemmed primarily from falling demand for large pickups and sport-utility vehicles. Ford Credit had a loss of $1.4 billion compared with a year- earlier profit of $62 million. The F-150 slide has contributed to a 24 percent industrywide decline in full-sized pickup sales this year. US auto sales have dropped eight straight months and are down 10 percent through June. J.D. Power and Associates, citing a deteriorating US economy, yesterday reduced its forecast for the year to 14.2 million sales, the lowest in 15 years. Ford is scaling back in 2008 after paring 46,300 jobs in North America the past two years. The automaker began dismissing salaried employees in June as part of a plan to trim those labor costs by 15 percent. About 4,200 US factory workers accepted buyouts in the first quarter, and Ford is planning to make offers at most of its US plants. Sales of the F-Series, which include the F-150 truck, fell 31 percent in the quarter to 126,575, overwhelming sales gains for models such as the Focus and Fusion sedans. The F-Series accounts for about a quarter of Ford's US vehicle sales. F-Series sales slid 23 percent for the first half, outpacing a 14 percent companywide decline. The automaker lost $15.3 billion in the past two years, mostly because of deficits in North America. It hasn't boosted its US market share since 1995. Ford slid to a 23-year low of $4.36 on July 2, after reaching a high for 2008 of $8.48 on May 1. Moreover, Daimler on Thursday cut its 2008 earnings outlook and Renault announced a new series of cost-cutting measures as the automakers grapple with surging oil prices, rising raw material costs and a strong euro. Daimler, the maker of Mercedes-Benz cars and a 20 percent owner of Chrysler, reported a net profit of 1.4 billion euros ($2.2 billion), down from 1.85 billion euros a year ago. Earnings before interest and tax fell 4 percent to 2.05 billion euros while revenue rose 6 percent to 25.38 billion euros. Daimler said it now expects earnings before interest and taxes for the year to exceed 7 billion euros, due to rising raw-materials prices and the economic slowdown. Its previous forecast was for a significant improvement on the 7.7 billion euros it reported in the previous year. German investors sent shares of the Stuttgart automaker down over 8 percent, more than wiping out optimism from Wednesday when other European automakers like Volkswagen, Peugeot and Fiat clung to their earnings view for the year. See story on Volkswagen and Peugeot. Daimler said it took a 373 million euro hit on earnings before interest and taxes in the latest quarter from its stake in Chrysler. This reflects Chrysler's performance in the first quarter, given that Daimler reports its minority holdings on a three-month lag. It suggests Chrysler lost nearly $3 billion before interest and tax during the first quarter, though Daimler and majority Chrysler owner Cerberus Capital Management have repeatedly said that different accounting rules mean those calculations are not necessarily accurate. Outside of Chrysler, unit sales at Mercedes-Benz cars rose 11% and earnings were up 1 percent, on demand for C-Class models and the Smart for-two model. Chinese and Russian demand also helped, Daimler said. At Daimler Trucks, unit sales rose 10 percent, while profit was flat. French automaker Renault on Thursday announced a series of measures to cope with surging oil prices, rising raw material costs and slowing European auto markets after reporting a 37 percent rise in first-half net income. Renault said first half net income rose to 1.47 billion euros ($2.3 billion) from 1.07 billion euros when excluding the contribution from Nissan.
