Ford have reported a 2008 first quarter net income of $100 million, an improvement of $382 million from the same quarter last year ? a sign that their downsizing strategy is starting to pay dividends.
Ford?s first quarter revenue was (excluding special items) $39.4 billion, down from $43 billion a year ago. When the 2007 results are adjusted to exclude Jaguar Land Rover and Aston Martin revenue for 2008 has actually increased.
First quarter highlights for Ford included:
? Posted strong profits of $739 million in Ford Europe and $257 million in Ford South America.
? Improved Ford North America results by nearly $600 million compared with the first quarter of 2007.
? Achieved $1.7 billion in cost savings, including $1.2 billion in Ford North America (at constant volume, mix and exchange; excluding special items).
? Improved productivity in North America; achieved agreement to reduce U.S. hourly personnel by an additional 4,200 through our recent enterprise-wide buyout program.
? Agreed to sell Jaguar Land Rover to Tata Motors with expected closure in the second quarter.
? Further integrated our global Product Development and Purchasing functions. These actions will accelerate new vehicle development, improve quality and reduce costs.
? Introduced the Ford Fiesta, our all-new global small car, at the Geneva Motor Show. Fiesta will be sold in virtually all of our major worldwide markets by 2010.
? Improved initial quality in North America by 8 percent in our most recent survey, putting Ford at parity with Honda and Toyota as the best in the industry.
In stark contrast to Ford?s dazzling performance in Europe and South America was their lack lustre performance in North America where they reported a pre-tax loss of $45 million. Mind you, this compares favourably to their loss of $613 million a year ago. In fact, the North American balance sheet has taken the pundits expecting a more prodigious loss in this region by surprise.
The $1.2 billion in costs that Ford saved in North America is largely the reason for their turn-around in this region. The cost cuts were achieved by reducing volume, increasing efficiency and reducing the work-force.
Volvo also felt the pinch with the Swedish manufacturer posting a pre-tax loss of $151 million a turnaround on its $94 million dollar profit for the same period last year - a result of slowing sales and unfavourable currency exchange rates.
Downsizing their way to profitability appears to be working but at some point Ford need to be certain that the cars they produce are the type of cars the consumer wants to buy, an issue both Ford and GM have been contending with over recent years. You only have to look at Ford's European range to see how well the right product can perform.