DEARBORN, Mich. (Reuters) - Ford Motor Co.(F.N), which is struggling to implement a multiyear restructuring plan, fell back into the red in the third quarter after snapping a year-long losing streak in the second quarter.þþThe world's second largest automaker said on Wednesday its third-quarter net loss narrowed to $326 million from a loss of $692 million a year earlier. While its results exceeded forecasts, the company's shares and corporate bonds fell sharply amid concern about whether it can staunch its losses in a negative pricing environment.þþFord also said the return on its U.S. pension fund assets was down 15 percent year-to-date, pushing the fund's underfunding status to $6.5 billion in the third quarter from $3.2 billion at the close of the second quarter. About 70 percent of Ford's pension fund assets are invested in stocks.þþBefore special items, including a write-down of about $500 million for its loss-making sale of Kwik-Fit, a British-based vehicle repair chain, Ford said it posted a profit of $220 million or 12 cents per share.þþWhile that was about four times better than Wall Street estimates -- and driven by a 9 percent increase in Ford's revenues and global vehicle sales over the same quarter last year -- some analysts said the numbers were overshadowed by much larger concerns about a company that lost $5.45 billion last year.þþFord shares closed down 61 cents, or about 6.88 percent, at $8.26 in Wednesday's trading on the New York Stock Exchange. The stock drop, and a widening of spreads on Ford's corporate bonds, came after the Standard and Poor's rating agency, which cut General Motors Corp.'s(GM.N) long-term credit rating, warned that it may also downgrade Ford.þþPENSION WOESþþS&P cited increases in the unfunded pension liabilities of both GM and Ford as among causes for concern about their long-term health. GM, the world's largest automaker, said on Tuesday that this year's stock market meltdown meant that its U.S. pension fund, which was underfunded by $9 billion at the end of 2001, could have a $20 billion hole in it by 2003.þþChief Financial Officer Allan Gilmour said Ford's pension plan, which was fully funded at the start of the year, was now underfunded by about 20 percent. But he added that Ford's strong cash position, with a horde of about $25.7 billion, was large enough deal with the swelling pension burden.þþGenerous pension and retiree benefits are a legacy of hard-fought contract agreements between Detroit's Big Three automakers and the powerful United Auto Workers union. The contracts come up for renewal next September.þþFord Chairman and Chief Executive Bill Ford Jr. insisted that the company's nine-month-old turnaround plan, focused largely on cost cuts aimed at generating $7 billion in pretax annual profits by mid-decade, is gaining traction after a slow start earlier in the year.þþBut he also said the company needed ``to bring a greater sense of urgency'' to its restructuring effort and stressed, in a conference call with Wall Street analysts and journalists, that it is looking at ways to accelerate its cost-cutting efforts.þþ``We're going to step on the gas,'' said Ford. ``We're attacking non-product costs in a much more aggressive way.'' þþ'PRICE DETERIORATION'þþSkeptical investors have hammered shares of the corporate giant to 10-year lows in recent weeks, as it was buffeted by analyst reports about cash and market share erosion, Ford's enormous debt and pension liabilities and the capital injections needed to support consumer incentives such as interest-free financing.þþS&P analyst Scott Sprinzen said he was concerned that Ford's restructuring gains would be wiped out ``by weakening industry demand in North America, industrywide intensification of price deterioration, partly resulting from aggressiveness by General Motors Corp., and Ford's market share losses.''þþGilmour said in a statement that Ford sees a slight profit for the fourth quarter and a full-year profit of about 40 cents per share, within the range of analysts' forecasts. But neither he nor Bill Ford offered an earnings outlook for 2003.þþFord's results showed that it lost about $53 for every vehicle built in North America in the third quarter. That compares to a profit of up to $400 for every vehicle built by GM.þþFord's U.S. marketing costs, including incentives such as zero-percent financing and cash rebates, represented 15.9 percent of its revenue in the third quarter, up from 15.6 percent in the second quarter but down slightly from the third quarter last year despite its escalating price war with GM.þþFord shares have fallen about 44 percent and underperformed those of GM by around 25 percent since the start of the year.þþDavid Cole, veteran head of the Ann Arbor, Michigan-based Center for Automotive Research, told Reuters no one should underestimate the issues confronting Ford, which went from earning $7.24 billion in 1999 and $3.47 billion in 2000 to its massive loss last year.þþ``Over the last 30 or 40 years, this is probably the most difficult time that they've had. It's very challenging,'' said Cole.þþ``What I think is most interesting is the speed with which things came apart on them ... It's just not something that you expect to see happen that quickly.'' þþþ
Source: NY Times
