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News of February 01, 2000
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Ford Motor Company Reports Industry-Record Operating Income of $7.2 Billion
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In 1999 and Record Fourth Quarter Earnings of $1.8 Billion
DEARBORN, Mich. - Ford Motor Company earned $7.2 billion in 1999, more than any other automotive company in history, and also established a new company record for annual revenue, which was $163 billion, up 13 percent.
"Ford had an outstanding year in 1999 by most measures and we achieved industry-record earnings, but what truly set the company apart was our consumer-focused business strategy," said President and CEO Jac Nasser. "We made tremendous progress toward strengthening our brands and transforming the way all the people of Ford connect with consumers. This holistic approach is improving our core automotive business and enhancing shareholder value."
Ford reported full-year earnings of $7,237 million or $5.86 per diluted share of common and Class B stock. In 1998, Ford reported earnings of $22,071 million or $17.76 per share, including a non-cash gain of $15,955 million that resulted from Ford's spin-off of Associates First Capital.
Fourth-quarter 1999 earnings were $1,806 million or $1.47 per share on revenue of $44 billion. In the fourth quarter of 1998, Ford earned $1,043 million or 84 cents per share on revenue of $38 billion. The fourth quarter of 1998 included a charge of $631 million or 51 cents per share primarily for employee separation programs in North America, Europe and South America.
As highlights of 1999, Nasser pointed to:
- Ford's acquisition of Volvo Car and the creation of the Premier Automotive Group, which is comprised of Volvo, Jaguar, Lincoln and Aston Martin, to drive growth in higher margin vehicle segments.
- The acquisitions of Kwik-Fit, Automobile Protection Corporation (APCO) and other businesses to accelerate Ford's growth in automotive consumer services.
- The development of e-business partnerships with Microsoft's CarPoint, Oracle, TeleTech, Yahoo! (announced in January 2000) and others to better connect with consumers and drive operating efficiencies at Ford, among its dealers and with supplier companies.
- Ford also launched several highly successful products, including the Ford Focus, Mercury Sable and Ford Taurus in North America, as well as the Volvo S40/V40, Lincoln LS, Jaguar S-TYPE and Ford Excursion. In India, Ford launched the new IKON.
- The Focus was the first vehicle to be named Car of the Year by journalists in both North America and Europe, and the Lincoln LS was named Motor Trend's Car of the Year.
AUTOMOTIVE OPERATIONS
Full-year 1999 earnings from automotive operations were a record $5,721 million on record revenue of $137 billion; after-tax return on sales (ROS) was 4.2 percent. In 1998, earnings from automotive operations were $4,752 million on revenue of $119 billion; ROS was 4.0 percent.
Worldwide factory unit sales of 7.2 million vehicles in 1999 exceeded the previous record of 7.0 million established in 1997. Ford also reduced its total costs in 1999 by $1 billion at constant volume and mix, bringing total cost reductions to more than $6 billion since 1996.
Net income from automotive operations in the fourth quarter of 1999 was a record $1,449 million on revenue of $38 billion, compared with fourth-quarter 1998 earnings of $820 million on revenue of $32 billion.
Up-front lump-sum payments of $103 million or eight cents per share associated with the ratification of the company's new contracts with the United Auto Workers (UAW) and Canadian Auto Workers (CAW) unions are included in automotive results in the North America region for the quarter.
North America: Full-year 1999 earnings in North America were a record $6,137 million on record revenue of $100 billion; ROS was 6.2 percent. Full-year 1998 earnings in North America were $4,612 million on revenue of $87 billion; ROS was 5.3 percent.
Fourth-quarter 1999 earnings in North America were a record $1,576 million on record revenue of $27 billion. Fourth-quarter 1998 earnings were $1,047 million on revenue of $24 billion. Compared with 1998, Ford's fourth-quarter 1999 earnings reflect the non-recurrence of the charge for employee separation costs, lower costs, higher volume and a more favorable vehicle mix.
Europe: Full-year 1999 earnings in Europe were $28 million on revenue of $30 billion. Full-year 1998 earnings in Europe were $193 million on revenue of $24 billion.
Fourth-quarter 1999 results in Europe improved to a loss of $55 million on revenue of $9 billion. Fourth-quarter 1998 results were a loss of $74 million on revenue of $7 billion. Compared with 1998, Ford's fourth-quarter 1999 results reflect the non-recurrence of the charge for employee separation costs, the addition of Volvo Car and lower taxes, offset by lower volumes and market share of Ford-brand vehicles, primarily the Ka, Fiesta and Mondeo.
South America: Full-year 1999 results in South America were a loss of $452 million on revenue of $2 billion. In 1998, Ford lost $226 million in South America on revenue of $4 billion.
Fourth-quarter 1999 results in South America improved to a loss of $95 million on revenue of $547 million. Fourth-quarter 1998 results were a loss of $151 million on revenue of $725 million. Compared with 1998, Ford's fourth-quarter 1999 results primarily reflect lower costs and the non- recurrence of the charge for employee separation costs, partially offset by lower revenue.
Other Markets
Full-year 1999 earnings in Ford's other markets, which include Australia, Japan, Thailand, India and other Asia-Pacific countries, were $133 million on revenue of $5 billion. In 1998, Ford earned $173 million in the region on revenue of $4 billion.
Fourth-quarter 1999 earnings in the region were $23 million on revenue of $1 billion. In the same period in 1998, Ford lost $2 million on revenue of $815 million. These results reflect primarily Ford's share of the profit improvement at Mazda Motor Corp.
VISTEON AUTOMOTIVE SYSTEMS
The earnings of Visteon Automotive Systems are included in the company's automotive results. In 1999, Visteon earned $735 million, compared with $703 million in 1998.
In the fourth quarter of 1999, Visteon earned $95 million, compared with $129 million in fourth quarter of 1998. Compared with 1998, the decline in fourth-quarter 1999 earnings reflected the impact of negotiated price reductions, the labor agreement in North America and currency-related costs, offset partially by cost efficiencies and improved volume.
Ford and Visteon are close to completing a market-pricing review begun in 1999 of various carry-over components and systems Ford purchases from Visteon. When the review is completed and both parties agree to a final pricing level, it is expected that Visteon will reduce prices to Ford.
(Jan. 26, 2000)
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