Ford's Loss Doubles; BMW's Net Up; Mitsubishi's Loss Narrows

Includes: F, TM
by: Steven Towns

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Ford Doubles Reported Loss for Second Quarter and BMW's Earnings Rise 17%; New Competition May Test Sales

  • Summary: Ford Motor Co. reported its second quarter year-over-year loss more than doubled to $254 million, or 14 cents per share, over its earlier earnings report due to increased pension-related losses that are expected to total $1.2 billion, up $200 million from its previous estimate. The pension-related costs include early retirements, enhanced benefits, and recognition of accelerated costs with Ford's U.S. hourly work force. Ford expects to lose 12,000 hourly workers through attrition this year -- more than previously expected. Ford also disclosed that it expects its Premier Automotive Group to be unprofitable in 2006. It has hired long-time investment banker Kenneth Leet to review PAG and find a solution for the loss-making Jaguar brand. Ford spokesman Tom Hoyt said, "There are no new plans to divest our brands or invest in a new alliance."

    BMW AG reported a 17% rise in second quarter earnings to €787 million ($1.01 billion) but said it could face pressure in meeting sales targets against increased competition in the luxury-car segment by competitors like Toyota Motor Corp. Toyota is said to be targeting BMW on its home turf in Europe with its Lexus brand and Mercedes-Benz is readying for a comeback. BMW hasn't published 2006 sales targets but expects to sell 1.4 million autos in 2007 and 1.6 million by 2010. Revenue rose in Q2 to 8.5% to €13.19 billion. BMW's outgoing CEO Helmut Panke said in a statement that "We have again increased earnings sharply and achieved new record figures for revenues and sales volume." However, BMW acknowledges currency fluctuations and high raw-materials prices have continued to hurt earnings.

    Mitsubishi Motors Corp reported a narrower Q1 net loss of 15.11 billion yen ($131.9 million) -- from 21.65 billion yen a year earlier -- on improved North American operations and said it is aiming to return to profitability this fiscal year. Mitsubishi is Japan's only auto manufacturer in the red. Its operating loss fell to 6.79 billion yen from 13.78 billion yen as sales were lower by 0.4% to 483.88 billion yen.

  • Comment on related stocks/ETFs: See Mick Weinstein's Ford Mulling Sale of Its Jaguar Unit and Credit Union and Steven Towns' Toyota and Honda Stick it to the U.S. Big-3, in which recent WSJ articles are summarized on the subject of Ford's troubles and Japanese autos rising momentum in grabbing market share in U.S. Big-3 territory. Toyota (NYSE:TM) reported record Q1 profits today; look for an earnings summary forthcoming on SeekingAlpha.