Page last updated at 15:12 GMT, Thursday, 29 January 2009

Ford reports record yearly loss

Icicles form on the grille of a Ford vehicle
Carmakers around the world have been hit by a drop in demand

US carmaker Ford has reported the biggest full-year loss in its history, but said it is still not going to ask for government loans.

Ford said its net loss for the fourth quarter of 2008 was $5.9bn (4.1bn). For the whole year, the loss amounted to a record $14.6bn.

Unlike its rivals General Motors and Chrysler, Ford has so far not relied on US government help.

Carmakers around the world have been hit by a drop in global demand.

Ford's December US sales fell 32%, while General Motors' sales dropped 31% in December, against the same month a year earlier.

Ford reported a loss of $2.7bn in 2007 and $12.6bn in 2006, its previous record for a loss.

Ford added that its finance division, Ford Motor Credit, would cut 1,200 jobs, or 20% of the division's workforce.

The company also said it had reached an agreement with the United Auto Workers union to end the "jobs bank", where laid-off workers receive most of their pay.

Chrysler ended its "jobs bank" on Monday as a condition of receiving government help. GM plans to end it next week.

No loan needed

In the fourth quarter of 2008, Ford's revenue fell to $29.2bn, down from $45.5bn a year earlier. Its quarterly net loss of $5.9bn was bigger than expected by analysts.

Things are so volatile. This is unprecedented
Lewis Booth, Ford chief financial officer

Despite the loss, Ford said in a statement that it had "sufficient liquidity" to fund its restructuring plan.

"Based on current planning assumptions, it does not need a bridge loan from the US government, barring a significantly deeper economic downturn or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company's supply base, dealers or creditors," the carmaker said in a statement.

Ford has secured a $9bn credit line from the US government in anticipation of worse times ahead.

General Motors and Chrysler have actually received billions of dollars in emergency loans from the government.

Troubled industry

"Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results," said Ford chief executive Alan Mulally.

Ford expects global sales to fall more than 10% in 2009. At the same time, Ford sees some improvements later this year thanks to government stimulus packages. "Things are so volatile. This is unprecedented," Lewis Booth, Ford chief financial officer said.

Car-parts maker Lear, whose largest customers are Ford and GM, reported a net loss of $688.2m for the fourth quarter in comparison with a $27m profit a year earlier.

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