Ford Australia Reveals 23% Profit Dip

[937]

http://www.theage.com.au/news/business/for...9641211665.html

Ford Australia reveals 23% profit dip

Ian Porter

October 2, 2006

THE perennially weak earnings of local car makers have deteriorated further, with Ford Australia revealing a 23 per cent drop in profit for 2005.

The lower earnings followed a fall in revenue caused by rising petrol prices and a glut of large cars, which started to eat into sales and profit margins in the second half of the year.

Earnings for the year fell from an adjusted $192 million to $148 million as demand for Ford's two main local products, the Falcon and Territory, fell.

And, in an indication of how bad things were back home, Ford Australia paid a $300 million dividend during 2005 as the North American Ford group scrambled to boost cash flows.

The fall in Ford's earnings echoed that of Toyota Australia, the only other car maker to have reported its results so far.

Toyota's earnings dropped 22 per cent from $70.8 million to $54.9 million even though revenue rose 4 per cent to $7.6 billion for the year to March 31.

GM Expensive Daewoo and Mitsubishi Australia are also expected to report weaker results, with GMH being particularly affected by the costs associated with pulling the Elizabeth factory back from three shifts a day to two late last year.

Ford's revenue dipped for the first time in five years, easing 2.5 per cent to $3.89 billion as vehicle sales dropped 4.4 per cent to 129,200 cars and trucks.

The trend continued into this year, and Ford president Tom Gorman said the poor conditions had been compounded early this year by a shortage of supply of the company's new imported small car, the Focus.

"Rising petrol prices have had a significant impact on the sales of large cars and SUVs (sport utility vehicles) in Australia," Mr Gorman said when releasing the results on Friday. "Although this has had a flow-on effect on overall sales of our Falcon and Territory model lines, we maintained strong market share of each category during 2005."

The value of government grants — believed to include tax exemptions earned under the Federal Government's automotive competitiveness and investments scheme — fell during the year from $118 million to $91.3 million.

The effect of this decline on the profit and loss account was more than offset by a $31.9 million gain before tax on foreign exchange contracts.

Although Ford's sales volumes were down, it still managed to sell 96,898 locally made vehicles (down 4.3 per cent), the most of the local car makers.

The Falcon provided the bulk of the sales with 53,080 (down 18.8 per cent), followed by the Territory at 23,454 — up on the 2004 volume of 13,583 because 2005 was the model's first full year on sale. Both the Falcon and the Territory took a 33 per cent share in their market segments.

Mr Gorman said 2006 was "challenging", with external forces such as petrol prices still having an adverse effect on sales. To counter this, he said product development programs and investment strategies would position the company well for the future. He said the company's success in becoming the Ford group's design centre for a global light truck proved Ford Australia had strong engineering and design capability.

"We look forward to building on those and other export opportunities in the years to come," Mr Gorman said.

In May Ford received a $52 million grant from the Federal Government — and dollar-for-dollar assistance from the State Government — to help with the cost of expanding its design operations to meet this contract and also to help pay for developing left-hand drive versions of the 2008 Falcon and Territory.

Edited 01/10/06 11:24 PM by 937

[Guest]

Goes hand in hand with the 30% plus drop in value of my 12 month old T.

No sympathy from me I'm afraid

[Cro]

50% in 2 years

[Fat-Tony]

Goes hand in hand with the 30% plus drop in value of my 12 month old T.

No sympathy from me I'm afraid

←

Its just funny how when you would go to trade the car in, your told that, but when they are selling the car, they always seem to hold the value

[Dagabond]

Gee they only made $3.89 billion......

[Lumpen]

Profit of $150Million, all said and done.After workers are paid, tax avoided and all the rest. Really can't see anything wrong with that?

Lumpy

[markxr6t]

And sent $300 million home to Ford US?

[Guest newl]

If memory serves, Ford AU answers to Ford CA which probably then in turn answers to FMoCo World Headquarters, Dearborn, Michigan.

The money probably ends up somewhere someway.

[tmac450]

Maybe, if Ford did the right thing by their customers (especially repeat business) and offered decent trade-ins, boosting their used values, they would get more sales.

I can never understand why, through sheer dealership greed, they chop the arse out of their own resale values by offering such poor trade-in prices. Fuel prices is only one issue, they are compounded by house resale.

[veczar]

If my company made only that much profit id whinge too. Why dont they put some of that towards increased warrenty and performance departments