Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor — Q3 2003 Earnings Presentation
35 slides from Ford Mtr Co Del's earnings presentation, Oct 16, 2003
Slide 1: Third Quarter 2003 Earnings Review
THIRD QUARTER 2003 EARNINGS REVIEW OCTOBER 16, 2003
Slide 2: Third Quarter 2003 Summary
THIRD QUARTER 2003 SUMMARY Earnings per share of $0.15 from continuing operations excluding special items -- $(0.01) from net income Compared with guidance, earnings improvement reflected: Strong cost performance Record Ford Credit results International Operations showed continued improvement since
Slide 3: Third Quarter Results
Earnings Per Share Net Income $(0.01 ) $0.17 $0.68 $1.15 Continuing Opns. - Excl. Special Items 0.15 -- 0.83 -- Net Income (Mils.) $(25 ) $301 $1,288 $2,138 Continuing Opns. - Incl. Special Items 237 481 1,561 1,266 Pre-Tax Profit (Mils.) Incl. Special Items $423 $469 $2,478 $1,548 Excl. Special Ite
Slide 4: Effect of Adoption of FIN46 on Third Quarter Automotive Results
Consolidation of Joint Ventures $ 17 $ 0 Deconsolidation of Trust Preferred (95 ) 0 Securities Cumulative Effect of Change in N/A (264 ) Accounting Principle Total Effect of FIN46 Adoption $(78 ) $ (264 ) Memo: EPS Impact of Change in Accounting Principle $(0.14 ) Effect on Other Measures: Cash (Bil
Slide 5: Income from Continuing Operations Excluding Special Items Compared to Net Income
INCOME FROM CONTINUING OPERATIONS EXCLUDING SPECIAL ITEMS COMPARED TO NET INCOME Memo: Auto. Pre-Tax Profit (Mils.) Earnings Per Share Memo: Auto. Pre-Tax Profit (Mils.) Third Quarter Year to Date Earnings Per Share Income from Continuing Operations Excluding Special Items $0.15 $(553 ) $0.83 $109 S
Slide 6: Total Company Third Quarter 2003 Profit / (Loss)
TOTAL COMPANY THIRD QUARTER 2003 PROFIT / (LOSS) Memo: B / (W) 2002 $469 $9 $460 * Incl. Special Items W'wide Auto Fin Svcs 2Q 423 -609 1032 Total Automotive Financial Services $(609) Pre-Tax Profits by Sector (Mils.)* $1,032 $423 SLIDE 5
Slide 7: 2003 Third Quarter Pre-Tax Profit Compared with 2002 Third Quarter
2003 THIRD QUARTER PRE-TAX PROFIT COMPARED WITH 2002 THIRD QUARTER 2002 2003 Volume Revenue Cost Other Fin Svcs. -0.619 -0.609 -1.2 -0.1 0.8 0.5 0.5 0.3 Automotive Pre-Tax Profit (Bils.)* $(0.1) $(1.2) 2002 3rd Qtr. Net Pricing Cost Performance $0.8 Volume / Mix $(0.6) Other $0.5 2003 3rd Qtr. * Inc
Slide 8: Automotive Sector Third Quarter 2003 Profit / (Loss)
AUTOMOTIVE SECTOR THIRD QUARTER 2003 PROFIT / (LOSS) w'wide n. a. intl other 1995 MARKET PROFITS -609 -116 -494 1 Worldwide $(609) Pre-Tax Profits by Segment (Mils.)* $(116) $(494) North America International Other Automotive Memo: B / (W) 2002 $9 $(707) $220 $496 * Incl. Special Items $1 SLIDE 7
Slide 9: Automotive Sector -- North America Segment Third Quarter Key Metrics
AUTOMOTIVE SECTOR -- NORTH AMERICA SEGMENT THIRD QUARTER KEY METRICS -- 2003 vs. 2002 2002 2003 Revenue 21.3 17.9 2003 2002 $17.9 $21.3 Revenue (Bils.) 2002 2003 Vehicle Unit Sales 998 783 2003 2002 783 998 Vehicle Unit Sales (000) 2002 2003 PBT 591 -116 $591 2003 2002 Pre-Tax Profit (Mils.) $(116)
Slide 10: North America -- Revenue Continues to Improve
NORTH AMERICA -- REVENUE CONTINUES TO IMPROVE 2002 2003 2002 2003 Ford 21322 22252 20915 21660 Disciplined Focus on Incentives Planned Reduction in Daily Rental Units Discontinued Low-Margin Vehicles Strong F-Series and SUV Sales New Options and Features 2002 2003 2002 2003 Drivers Third Quarter Fir
Slide 11: Automotive Sector -- International Segment Third Quarter Profit / (Loss)
AUTOMOTIVE SECTOR -- INTERNATIONAL SEGMENT THIRD QUARTER 2003 PROFIT / (LOSS) int'l europe s.a. ap pag other PBT -494 -452 -26 1 -22 5 International $(494) Pre-Tax Profits by Operation (Mils.)* $(452) $(22) Europe Asia Pacific South America Other $1 $(26) Memo: B / (W) 2002 $220 $(206 ) $217 $50 $13
Slide 12: Automotive Sector - International Segment - Europe Third Quarter Key Metrics
AUTOMOTIVE SECTOR - INTERNATIONAL SEGMENT - EUROPE THIRD QUARTER KEY METRICS -- 2003 vs. 2002 1st Qtr 2nd Qtr East 4.4 4.7 2003 2002 $4.7 $4.4 Revenue (Bils.) 2002 2003 East 341 313 2003 2002 313 341 Vehicle Unit Sales (000) 1st Qtr 2nd Qtr East -246 -396 -452 $(246) $(452) 2003 (Excl. Special Items
Slide 13: Europe Restructuring Actions
EUROPE RESTRUCTURING ACTIONS Third Quarter 2003 U.K. Salaried Personnel Reductions 500 $(56 ) Fourth Quarter 2003 and First Half 2004 Removal of 3rd Shift at Genk Germany Salaried Personnel Reductions 6,200 (550) - (600 ) Other Manufacturing Efficiencies Total Restructuring Actions 6,700 $(600) - $(
Slide 14: Trend of 2003 Results for Ford Europe
TREND OF 2003 RESULTS FOR FORD EUROPE Pre-Tax Profit (Mils.) $(249 ) $(525 ) $(396 ) $(1,150) - $(1,200) Vehicle Unit Sales (000) 391 409 313 1,550 - 1,570 First Quarter * Excluding Special Items Third Quarter improved from Second Quarter, despite lower volume Restructuring and ongoing business impr
Slide 15: Full Year Automotive Cost Performance Forecast at $3+ Billion
FULL YEAR AUTOMOTIVE COST PERFORMANCE FORECAST AT $3+ BILLION Quality Mfg. Eng Overhead Net Product D&A Pension East 1.6 1.2 1.2 0.3 -0.2 -1.1 West 0.2 $0.3 $1.6 $(1.1) $(0.2) $1.2 $1.2 Projected 2003 Costs B / (W) 2002 (Bils.)* Net Product Costs Quality Related Pension / Healthcare Deprec./ Amort.
Slide 16: Financial Services Sector Third Quarter 2003 Profit / (Loss)
FINANCIAL SERVICES SECTOR THIRD QUARTER 2003 PROFIT / (LOSS) Memo: B / (W) 2002 $460 $349 $26 $85 Pre-Tax Profits by Segment (Mils.) Total Ford Cred Hert Other 1995 MARKET PROFITS 943 734 180 29 Total Hertz Other Financial Services $809 $186 $1,032 $37 Ford Credit SLIDE 15
Slide 17: Financial Services Sector - Ford Credit Third Quarter Results
FINANCIAL SERVICES SECTOR - FORD CREDIT THIRD QUARTER RESULTS Record Third Quarter Pre-tax Profits -- $809 million Improvement in earnings primarily reflects: Lower provision for credit losses Favorable impact of the interest rate environment on borrowing costs Favorable market valuation of derivati
Slide 18: 2003 Third Quarter Automotive Cash
2003 THIRD QUARTER AUTOMOTIVE CASH* Cash, Marketable and Loaned Securities, and VEBA Assets September 30, 2003 $26.9 $26.9 June 30, 2003 / December 31, 2002 28.7 25.3 Change in Gross Cash $(1.8 ) $ 1.6 Operating Related Cash Flows Automotive Pre-Tax Profits $(0.6 ) $ 0.1 Capital Spending (2.2 ) (5.6
Slide 19: 2003 Full Year Milestones
2003 FULL YEAR MILESTONES Planning Assumptions Industry Volume -- U.S. 16.5 million units 17.0 16.9 -- Europe 17.0 million units 16.8 16.8 Net Pricing* -- U.S. (Ford / LM) Zero Less than zero (0.9)% -- Europe (Ford) 1% (1) - (2)% (1.9)% Physicals Market Share Improve in all regions Mixed Mixed Quali
Slide 20: Outlook for the Fourth Quarter
OUTLOOK FOR THE FOURTH QUARTER Fourth Quarter production mixed compared with year ago 920,000 units in North America, down 31,000 units 430,000 units in Europe, down 20,000 units 195,000 units at P.A.G., up 25,000 units High incentive spending likely to continue in U.S. and Europe Full year cost imp
Slide 21: 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, geo-political events or other factors; Lower
Slide 22: Definition of Automotive Segments
DEFINITION OF AUTOMOTIVE SEGMENTS North America* International Europe South America* Asia Pacific Premier Automotive Group (P.A.G.) Other Other Automotive Ford, Lincoln, and Mercury brands in U.S., Canada, and Mexico Ford Brand Ford Brand Ford Brand Jaguar, Land Rover, Volvo, and Aston Martin worldw
Slide 23: Third Quarter Automotive Summary
THIRD QUARTER AUTOMOTIVE SUMMARY Appendix (Page 2 of 14) North America 998 783 $21.3 $17.9 $ 591 $(116 ) International Europe 341 313 $ 4.4 $ 4.7 $(246 ) $(452 ) South America 52 55 0.4 0.5 (243 ) (26 ) Asia Pacific 77 96 1.1 1.6 (49 ) 1 P.A.G. 188 163 4.9 5.6 (160 ) (22 ) Other - - - - (16 ) 5 Tota
Slide 24: Year-to-Date Automotive Summary
YEAR-TO-DATE AUTOMOTIVE SUMMARY Appendix (Page 3 of 14) North America 3,148 2,791 $65.8 $60.8 $ 1,977 $ 1,565 International Europe 1,101 1,113 $13.4 $14.9 $ (532 ) $(1,226 ) South America 139 148 1.2 1.2 (526 ) (126 ) Asia Pacific 227 260 3.1 4.3 (141 ) (53) P.A.G. 570 532 15.3 17.5 (352 ) 56 Other
Slide 25: 2003 Year-to-Date Market Results
2003 YEAR-TO-DATE MARKET RESULTS U.S. Industry (Mils.) 16.2 16.6 18.0 16.9 (0.2 ) Market Share (Pct.) - Ford and Lincoln Mercury 20.0 % 19.3 % 18.6 % 19.3 % (0.6 ) Pts. - Premier Automotive Group 1.2 1.3 1.3 1.3 0.1 Total U.S. Market Share 21.2 % 20.6 % 19.9 % 20.6 % (0.5 ) Pts. Net Pricing (Pct.)*
Slide 26: Production Volumes
PRODUCTION VOLUMES North America 786 (165 ) 920 (31 ) Europe 337 (20 ) 430 (20 ) P.A.G. 145 (9 ) 195 25 Units (000) Actual Appendix (Page 5 of 14) Third Quarter B / (W) 2002 (000) Units (000) Fourth Quarter Forecast B / (W) 2002 (000) 2003
Slide 27: Reconciliation of Net Pricing to Change in Automotive Sales
RECONCILIATION OF NET PRICING TO CHANGE IN AUTOMOTIVE SALES Appendix (Page 6 of 14) Automotive Sales 2003 $17,876 $22,830 $4,670 $14,920 $60,789 $21,780 $14,889 $13,377 2002 21,258 21,322 4,378 12,839 65,818 20,915 13,397 12,168 2003 B / (W) $ (3,382 ) $ 1,508 $ 292 $ 2,081 $ (5,029 ) $ 865 $ 1,492
Slide 28: 2003 U.S. Market Data
2003 U.S. MARKET DATA Appendix (Page 7 of 14) Sales Mix (Ford / LM) Fleet Sales (Pct. of Total) 28 % 27 % 16 % 24 % 1 Pts. Red Carpet Lease (Pct. of Total) 7 5 4 5 (7 ) Red Carpet Lease (Pct. of Retail) 10 7 5 7 (8 ) Inventory Days' Supply (Ford / LM) Car 66 67 70 70 2 Truck 95 86 66 66 (2 ) Average
Slide 29: Costs and Expenses Automotive Sector
COSTS AND EXPENSES AUTOMOTIVE SECTOR Appendix (Page 8 of 14) Total Cost and Expenses $33,035 $30,973 $2,062 $99,876 $98,526 $1,350 Select Cost Items Included Above: Depreciation $ 645 $ 722 $ (77 ) $1,864 $2,059 $(195 ) Amortization 580 580 0 1,803 1,932 (129 ) Selling and Admin. 2,410 2,466 (56 ) 6
Slide 30: Ford Credit Key Metrics
Receivables (Bils.) On-Balance Sheet $136 $132 * Off-Balance Sheet 66 49 Managed $202 $181 Credit Losses (Mils.) On-Balance Sheet $591 $466 Managed 706 679 Loss-to-Receivables Ratio On-Balance Sheet 1.71 % 1.52% Managed - U.S. Retail and Lease 1.51 1.86 - Worldwide Total 1.39 1.47 Allow. for Credit
Slide 31: Ford Credit Key Metric Definitions
FORD CREDIT KEY METRIC DEFINITIONS Appendix (Page 10 of 14) In addition to evaluating Ford Credit's financial performance on a GAAP financial statement basis, Ford Credit management also uses other criteria, some of which were previously disclosed in this presentation and are defined below. Informat
Slide 32: Ford Credit Ratio Definitions
FORD CREDIT RATIO DEFINITIONS Appendix (Page 11 of 14) In addition to evaluating Ford Credit's financial performance on a GAAP financial statement basis, Ford Credit management also uses other criteria, some of which were previously disclosed in this presentation and are defined below: Leverage: Tot
Slide 33: Ford Credit Reconciliations of Managed Leverage to Financial Statement Leverage
FORD CREDIT RECONCILIATIONS OF MANAGED LEVERAGE TO FINANCIAL STATEMENT LEVERAGE Sept. 30, 2002 (Bils.) Sept. 30, 2003 (Bils.) Leverage Calculation * Appendix (Page 12 of 14) Total Debt $140.3 $149.6 Total Securitized Receivables Outstanding 65.8 48.8 Retained Interest in Securitized Receivables (9.7
Slide 34: Automotive Gross Cash Reconciliation to GAAP
AUTOMOTIVE GROSS CASH RECONCILIATION TO GAAP Cash and Cash Equivalents $ 5.2 $ 6.8 $ 1.6 * $ 8.7 Marketable Securities 17.4 12.2 (5.2 ) 16.1 Loaned Securities 0 7.0 7.0 0 Total Cash / Market. Sec. $22.6 $26.0 $ 3.4 $24.8 VEBA 2.7 0.9 (1.8 ) 0.9 Gross Cash $25.3 $26.9 $ 1.6 $25.7 * Automotive cash fl
Slide 35: Automotive Operating Related Cash Flows Reconciliation to GAAP
AUTOMOTIVE OPERATING RELATED CASH FLOWS RECONCILIATION TO GAAP Cash Flows from Operating Activities before Securities $ 5.7 $(0.9 ) $ 4.9 Trading* Items Included in Operating-Related Cash Flows Capital Transactions with Financial Services Sector $ 1.7 $1.2 $ 2.8 Capital Expenditures (3.4 ) (2.2 ) (5