- The Washington Times - Thursday, July 20, 2006

DETROIT (AP) — Ford Motor Co. dashed Wall Street’s hopes for a profitable second quarter yesterday, blaming its dependence on high-margin sport utility vehicles for a $123 million loss as consumers shifted toward gas-sipping cars.

The nation’s second-largest automaker sought to appease its critics by pledging to speed up its North American turnaround plan, but didn’t say how it would accomplish that.

Ford, which has been losing market share to Asian manufacturers for a decade, has been stung by high gas prices because big trucks and SUVs account for nearly 70 percent of the vehicles it sells. Despite some recent success with new car models such as the Ford Fusion and Mercury Milan, the speed with which consumers have migrated away from gas guzzlers caught the company by surprise.

“We did anticipate that the world would not remain static and that things like crossovers and cars would actually play a bigger role in the industry’s future, and, therefore, we planned them to play a bigger role in our future,” Chairman and Chief Executive Officer Bill Ford said in a telephone interview.

“It’s just that the speed at which this happened — over one quarter — we didn’t foresee that,” he said.

Because of those changed circumstances, the company must accelerate its six-month-old turnaround effort, Mr. Ford said. But he insisted the automaker was moving in the right direction.

“We have the right strategy, and the cultural change has been remarkable. There’s a new sense of candor and urgency, an awareness of what needs to be done and an intense focus on fixing the business,” he said in a conference call with investors.

Mr. Ford said the company would announce new turnaround measures within the next two months, but he refused to elaborate.

“The key question is how Ford’s solution has changed in response to a more difficult environment,” Morgan Stanley analyst Jonathan Steinmetz said in a research note yesterday. “This is not yet clear.”

The Dearborn, Mich., automaker’s “Way Forward” plan, begun six months ago, calls for shedding 25,000 to 30,000 jobs and closing 14 plants by 2012. By year’s end, the company will have cut production capacity 15 percent and will be a third of the way toward its targeted number of employee cuts, Mr. Ford said.

The company’s loss of 7 cents per share for the April-June period contrasted with a profit of $946 million (47 cents) in the second quarter of last year. Revenue fell 6 percent to $41.97 billion from $44.55 billion.

Excluding special items, Ford’s second-quarter loss from continuing operations was 3 cents a share. Wall Street had been expecting a profit of 12 cents per share, according to a survey of analysts by Thomson Financial.

Ford’s shares fell 14 cents, or 2.2 percent, to close at $6.19 on the New York Stock Exchange.

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