Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor — Investor Presentation (October 2002)
35 slides from Ford Mtr Co Del's investor presentation, Oct 21, 2002
Slide 1: Ford Motor Company Investor Meeting
Gord Notor Company, INVESTOR MEETING
Slide 2: Revitalization Plan - Key Elements
REVITALIZATION PLAN - KEY ELEMENTS Deliver Pre-Tax Profits of $7 billion per year by mid-decade - up $9 billion from 2001 running rate North America - Return to strong profitability Continue quality improvements Strengthen product portfolio Recapture lost share Right-size capacity Improve margins wi
Slide 3: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Delivering 2002 financial and operating commitments in competitive environment Positive trends in key business drivers - particularly in North America - Product - Share - Quality - Customer Satisfaction - Capacity Utilization - Cost Reductions - Profits - Cash Flow Ford
Slide 4: Revitalization Plan on Track - But Street and Investors Have Concerns
REVITALIZATION PLAN ON TRACK - BUT STREET AND INVESTORS HAVE CONCERNS Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities BALANCE OF PRESEN
Slide 5: Market Share Stabilized and Now Improving
FULL YEAR 1st Qtr APRIL Retail 15.6 15.4 17.7 Fleet 5.1 5.9 3.6 2002 Trend of Total U.S. Market Share Memo: Car 16.1% 16.7% 16.6% Truck 24.9% 25.7% 25.7% First Quarter MARKET SHARE STABILIZED AND NOW IMPROVING Second Quarter Third Quarter Fourth Quarter fleet share normally about 5% 15.6% 5.1% 5.9%
Slide 6: U.S. Retail Share Gaining Momentum
U.S. RETAIL SHARE GAINING MOMENTUM 1st Qtr 2nd Qtr July Aug 0.192 0.196 0.202 0.206 2002 Trend of Ford Motor Company Retail Market Share First Quarter Second Quarter July August Source: Polk Registrations
Slide 7: U.S. Retail Share Growth Particularly Strong at Ford Division
1Q 2Q July August Ford 0.158 0.161 0.166 0.17 First Quarter July August Second Quarter Source: Polk Registrations 2002 Share of Retail Business Segment Memo: Chevrolet 16.4% 14.6% 15.4% 14.6% 15.8% 16.1% 16.6% 17.0% U.S. RETAIL SHARE GROWTH PARTICULARLY STRONG AT FORD DIVISION
Slide 8: Market Share Growth Achieved Despite Lower Marketing Cost
1Q Ford Div 1964 Chev 2190 Chrysler 2250 toyota 1043 VW 1586 Ford Division Dodge Chevrolet Source: Autodata U.S. September Marketing Cost (Per Unit) Avg. European Memo: (O) / U prior year $(71) $(565) $(187) $0 $(156) Avg. Asian $1,964 $2,190 $2,239 $1,043 $1,586 MARKET SHARE GROWTH ACHIEVED DESPITE
Slide 9: Quality Improvements One Factor Driving Share Growth in the U.S.
QUALITY IMPROVEMENTS ONE FACTOR DRIVING SHARE GROWTH IN THE U.S. Customer Satisfaction Sales Satisfaction Service Satisfaction Initial Vehicle Quality (3 MIS) J.D. Power 12 % Internal TGW / 1000 12 % R / 1000 8 Warranty claims (3 MIS) 8 Safety recalls Number of recalls 2001 vs. 2000 58 % 2002 vs. 20
Slide 10: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities
Slide 11: Wave of New Products Coming in Months
WAVE OF NEW PRODUCTS COMING IN 18 MONTHS N.A. - Ford Brand / LM Lincoln Aviator Ford F-Series (F-150) Mustang Mach I Ford Windstar Lincoln LS Mercury Monterey Ford F-650 / F-750 Ford Escape Hybrid Mercury Marauder Europe - Ford Brand Ford Fusion Ford StreetKa Ford Transit Connect Ford Sport Ka Ford
Slide 12: U.S. Product Leadership
U.S. PRODUCT LEADERSHIP Ford Has 4 of the Top 10 Best Selling Vehicles #1 F-Series #3 Explorer #8 Taurus #10 Focus Ford Segment Leaders Sports Car Mustang Compact Pick Up Ranger Medium SUV Explorer Full Size Pick Up F-Series Full Size Van Econoline Note: Volvo XC90 - SUV of the year Segment Leaders
Slide 13: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities
Slide 14: Cost Progress Accelerated in Recent Months
2002 Non-Product Cost Reduction - On track to reduce by $2 billion COST PROGRESS ACCELERATED IN RECENT MONTHS Capacity utilization - North American Target 104% Overhead reduction Material cost reduction Ahead of plan - NA Forecast 108% -- up 13 points On track; Additional actions underway On track a
Slide 15: North America Manufacturing Productivity and Capacity Utilization Improvements
NORTH AMERICA MANUFACTURING PRODUCTIVITY AND CAPACITY UTILIZATION IMPROVEMENTS Shift off at Edison Shift off at Wixom Mass relief at Atlanta / Chicago Discontinued products: Escort, Cougar, Villager, Continental, Blackwood Line-speed reduction - Wayne - Lorain CAW contract ratified: Permits closing
Slide 16: North America Overhead Cost Reductions
NORTH AMERICA OVERHEAD COST REDUCTIONS Implemented compensation changes Eliminated merit increase for Senior Management Delayed merit increases for other salaried employees Increased salaried retiree healthcare contributions Increased salary drug co-pays Salaried employee reductions Eliminated 3,500
Slide 17: Examples of U.S. Material Cost Reductions
Underbody changes Emission system changes Equipment changes Product design - 200+ smaller actions Total EXAMPLES OF U.S. MATERIAL COST REDUCTIONS Explorer/ Mountaineer (Per Unit) $130 80 55 339 $604 These are all 2003-Model Year actions; 50% in place with remaining 50% incorporated by year end 2002
Slide 18: Implementing Team Value Management
PURCHASING ENGINEERING COST ESTIMATING TVM TEAM TEAM APPROACH VALUE EQUATION BENCHMARKING / GAP CLOSURE TVM FOCUSED ON... COST: IMPLEMENTING TEAM VALUE MANAGEMENT European TVM Cost Reduction Examples Engine components Castings Electrical components Cost Reductions 21% 36% 20% Completion Timing 2003
Slide 19: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities
Slide 20: Long-Term Vision for Premier Brands Re-affirmed
LONG-TERM VISION FOR PREMIER BRANDS IS RE-AFFIRMED BUT PRESENT PLAN CALLS FOR MORE GRADUAL (AND SUSTAINABLE) RATE OF GROWTH Grow luxury brands in expanding industry segment Leverage scale and cross-brand synergies to earn Best-in-Class premium returns 2000 2001 2002 ongoing East 675 693 739 900 150
Slide 21: Jaguar Performance Below Expectations in 2002
JAGUAR PERFORMANCE IS BELOW EXPECTATIONS IN 2002, BUT MAJOR ISSUES ARE TRANSITIONAL Jaguar $500 million loss reflects Deferral of all-aluminum XJ Sedan from Fourth Quarter 2002 to First Quarter 2003 De-stocking to align with adjusted growth rate Higher incentive costs XJ Sedan unveiling in Paris was
Slide 22: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities
Slide 23: U.S. Pension Fund Status
U.S. PENSION FUND STATUS Strong cash position facilitates managing pension obligations without changing operating plans Plan to contribute ahead of requirements Pension assets have declined, along with the equity market Year-to-date return on pension assets negative 15% U.S. plans are underfunded by
Slide 24: Ford U.S. Pension Fund Status/Sensitivity
Income/(Expense) Funded Status Income/(Expense), Pre-tax 2003 Sensitivity Discount Rate at YE '02: @ 6.75% Contribution during 2003: $500 million (assumes contributions made evenly through the year) Long-Term Return Assumption: +/- 50bp FORD U.S. PENSION FUND STATUS/SENSITIVITY 2001 (Mils) $ 346 Pro
Slide 25: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities
Slide 26: Ford Credit Re-Focused Strategic Direction
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 East 113 125 135 145 165 190 208 220 230 240 250 260 FORD CREDIT RE-FOCUSED STRATEGIC DIRECTION Modified Vision & Mission Moderate Asset Growth FOCUS ON AUTOMOTIVE SYNERGIES & EFFICIENT USE OF CAPITAL $113 $245 $208 1995 2001 2006 MANAGED R
Slide 27: Ford Credit Summary of Growth Curtailment Actions
FORD CREDIT SUMMARY OF GROWTH CURTAILMENT ACTIONS Targeted N. America Reductions YTD Volume (O) / U 2001 Reduce non-Ford brands' volume 40% 50% Reduce used retail volume 35% 31% Reduce leasing volume 10% 27% Integrate Fairlane Credit Pursue alt. bus. models in selected int'l markets Prepare Hertz le
Slide 28: Asset-Backed Securities Capacity
Not recently used Term Securitization Bank- Sponsored Conduits Distribution channels for alternative funding Proven capability Asset classes Asset-Backed Commercial Paper (FCAR & Motown) Ford Credit Retail Assets Lease Assets If necessary, we have ample capacity to fund the business through 2003 wit
Slide 29: Ford Credit Plans to Operate at Lower End of Target Leverage Range
FORD CREDIT PLANS TO OPERATE AT THE LOWER END OF TARGET LEVERAGE RANGE 1999 2000 2001 Mar Jun Sep Managed 13.6 14 14.8 13.7 13.4 13 Manag 13.6 14 14.8 13.7 13.4 Owned 12.2 12 11.2 9.5 9.5 14.8* 13.7 13.9 13.6 Debt-to-Equity Ratio Managed Portfolio Memo: - - Owned Portfolio 12.2 11.9 11.2 9.5 9.5 9.0
Slide 30: Revitalization Plan on Track
REVITALIZATION PLAN ON TRACK Market share growth Product pipeline Pace of cost reductions Premier brands' profit contribution Pension fund impact on earnings / cash flow Ford Credit funding capability Automotive liquidity and debt maturities
Slide 31: Automotive Liquidity
AUTOMOTIVE LIQUIDITY (BILS.) 1999 2000 2001 2002 2003 2004 LINES 9.1 8.9 8 8 0 0 CASH 23.8 27.3 17.7 25 0 0 Cash* Committed Credit Lines** $8.6 $26.3 2001 $7.9 2002 $17.7 Financial Flexibility Exists to Maintain Liquidity $25.5 2003 2004 * End-of-period gross cash incl. VEBA; September 30 for 2002 *
Slide 32: Liquidity / Flexibility Programs
Unsecured Motown FCAR Conduits Used 2.5 5 11.5 5.2 Capacity 7 5 12.7 12.7 7.7 Bank Lines 12 0.25 12.7 n/a 25.7 Bils. Ford Credit Facilities $ 12 ABCP Facilities 13 Auto Either / Or Facilities 7 Subtotal Bank Lines $ 32 Available Conduits 8 Total Backup Facilities $ 40 LIQUIDITY / FLEXIBILITY PROGRAM
Slide 33: Automotive Debt Maturities Favorable
AUTOMOTIVE DEBT MATURITIES FAVORABLE 1 Year '1-5 '6-10 '11-20 '21-30 '31-50 -More 0.3 0.9 1 0.7 9.4 1 0.5 September 30, 2002* $0.3 $1.0 $9.4 $0.5 Less than 1 Year 1-5 Years 11-20 Years $0.7 6-10 Years $0.9 $1.0 More Than 50 Years 31-50 Years 21-30 Years Total Debt $13.8 Billion Weighted Avg. Maturit
Slide 34: Near-Term Outlook -- 2003
NEAR-TERM OUTLOOK -- 2003 Uncertain economic outlook Planning for a difficult market environment Focus on controllable items: Quality Productivity and Cost Efficiency Revenue per unit Plan to sustain market share momentum Plans in place and contingency plans under development
Slide 35: Safe Harbor
SAFE HARBOR Greater price competition in the U.S. and Europe resulting from currency fluctuations, industry overcapacity or other factors A significant decline in industry sales,particularly in the U.S. or Europe, resulting from slowing economic growth or other factors Lower-than-anticipated market