Ford Australia Reports Profit for 2009

[Road_Warrior]

http://www.carsales.com.au/news/2010...in-black-19274

Marin Burela, President and CEO of Ford Australia, announced in a press conference today that the local manufacturer had posted a small, but significant $13 million profit for 2009. Burela advised the press that the 2009 outcome was a major financial turn-around from the year before -- to the tune of $287 million.

It was also, according to Burela, the first profit Ford Australia had incurred since 2005 and was achieved in a market environment of 7000 fewer vehicles sold by the company for the year, but with more money spent on R&D during the same period. Ford's investment in R&D for 2009 was actually 22 per cent higher than for the previous year.

"As we celebrate 85 years of manufacturing in Australia and 50 years of Falcon, Ford Australia is extremely pleased that our hard work and singular focus on the needs of our customers has seen us return to profitability a year ahead of plan," Burela told the local press.

"Like our parent company in the US, Ford Australia took decisive and immediate action at the onset of the global financial crisis in late 2008 in order to weather the breaking economic storm.

"We acted quickly to significantly restructure our business in line with the prevailing market conditions, which has resulted in a $13 million profit for 2009.

"We significantly changed our sales and production focus to build cars based on demand and introduced more fuel efficient vehicles like the Fiesta ECOnetic while improving the environmental performance of our locally manufactured models.

"The great work of our product development team paid off as the award-winning FG Falcon sedan increased its share of the large sedan segment from 25 per cent to 34 per cent over the year.

"We also streamlined our production build process and maintained a laser-like focus on our inventory management."

Burela says that the result was a reflection of Ford Australia "delivering profitable [sales] volume" and reducing the "manufacturing footprint". Basically, the company cut costs, avoided slash-and-burn discounting at retail level and built only those vehicles specifically ordered by paying customers.

In respect of the dealer inventory, Ford Australia can boast "the highest turn rate in Australia," says Burela, meaning cars arriving at the dealers are being snapped up by buyers in short order -- typically within a month.

Burela attributes Ford's impressive resilience during the Global Financial Crisis to its foresight. Seeing the coming crisis, the company embarked on what the president describes as a "significant seismic shift" in the way it conducted its operations. Burela believes the change for the better was a consequence of "taking the right steps to shore up" the business, which was "restructured" very quickly.

Among other measures, Ford also reduced its inter-company borrowings by a figure Burela puts at between 42 and 45 per cent. It has been able to set and maintain retail prices at levels allowing more profit and this has been, in part, a consequence of the company's resurgent "brand appeal" and finding "a new type of customer".

The profit reportedly puts Ford Australia ahead of its financial plan for 2009. That, in turn, bolsters the company's confidence in its sales and marketing strategies for the current year.

Burela predicts that the Aussie new-car market in 2010 will exceed a million units once more. Other executives heading up his competitors -- and even Burela himself, just a few months ago -- have been more conservative, suggesting that the local market won't return to seven figures before next year. Burela is basing his optimism for Ford over the next 12 months partly on the speculation that the 2010 market will be bigger than expected.

With this in mind, and also taking into account the introduction of the EcoBoost Falcon and liquid injection LPG system in coming months, Burela anticipates local production at Broadmeadows could improve by as much as 20 per cent this year. The production line has been working overtime for the past "six or seven months," excluding the holiday period in January of this year and demand remains high for specific variants of the locally-manufactured Falcon and Territory range. These are the XR6 Turbo, the G6E Turbo, Territory TX and Territory Ghia.

Is that before or after tax profit??

[Joe5619]

Great news!! Nice to see profit can be made on the current (well 2009 levels) of production.. This should get better this year with them tracking at double digit growth on locally built cars. As long as Ford Aust can stay profitable I think locally built Falcons will stay.. HOPEFULLY

I've said it before & I'll say it again.. Profit, not sales!!!

[vztrt]

http://theage.drive.com.au/motor-new...0506-uem3.html

Ford Australia posts $13 million profit
BARRY PARK
May 6, 2010

It’s only a modest profit but Ford Australia is back in the black after a tough year.

Ford Australia has shrugged off one of the blackest years in its history, today posting a modest $13 million after-tax profit for the 2009 calendar year - or about $130 for each car it made here.

The positive result follows a four-year run of red ink for the car maker, which in 2008 lost $274 million after buyers fled from new-car showrooms in response to the global financial crisis.

Revenue from sales last year fell by $200 million to $3.1 billion, but Ford Australia chief executive Marin Burela said efficiencies in the company’s Australian car-making business and a focus on “profitable volumes and profitable vehicles” had helped the company make what amounted to a $287 million turnaround.

Ford built about 7000 fewer Falcon family cars and Territory soft-roaders at its Broadmeadows-based manufacturing facility after changing its production process to ensure each car rolling off the line had a buyer waiting in the showroom. Total production for the year was 99,279 vehicles.

Mr Burela said the car maker decided in October 2008 to have an “absolute laser focus” on its inventory of cars sold in Australia, and this had helped the company become cash-flow positive over the last 12 months.

“The manufacturing costs of our products are down, efficiencies are up, and at the end of every month we have nothing left over,” he said.

He said the company had also used its cash to pay down debt and grow its cash reserves.
Mr Burela said the small profit had not come at the cost of research and development of new products, which had increased by $55 million over its 2008 expenditure.

He said Ford Australia was also trading positively so far this year, and had introduced overtime at its plant for the last three months of last year to meet a growing demand for its locally made cars. Ford Australia’s parent company was the only US-based car maker to not extend its hand out for a government bailout after the global credit crunch struck in 2008, sending rivals including Chrysler and General Motors into bankruptcy.

Ford posted a $US2.1 billion profit in the US for the first quarter of this year.

Local rival Holden, meanwhile, posted a $210.6 million loss for calendar 2009 — the fifth run of red ink at the Red Lion in as many years.

[phillyc]

Originally Posted by vztrt

http://theage.drive.com.au/motor-new...0506-uem3.html

Wow, a Drive article that is positive towards Ford and realistic towards GMH. Oh, it's not written by Josh Dowling...

Originally Posted by drive

He said Ford Australia was also trading positively so far this year, and had introduced overtime at its plant for the last three months of last year to meet a growing demand for its locally made cars. Ford Australia’s parent company was the only US-based car maker to not extend its hand out for a government bailout after the global credit crunch struck in 2008, sending rivals including Chrysler and General Motors into bankruptcy.

Ford posted a $US2.1 billion profit in the US for the first quarter of this year.

Local rival Holden, meanwhile, posted a $210.6 million loss for calendar 2009 — the fifth run of red ink at the Red Lion in as many years.

Basically, Ford made a small profit after a horrid year before. Ford made the tough decisions earlier, just like their parent. Ford Aus are now profitable. Ford US is profitable. GM went bankrupt. GMH had a horror run last year and have lost money for 5 years straight...

[phillyc]

This i find particularly interesting.

Ford's investment in R&D for 2009 was actually 22 per cent higher than for the previous year.

Mr Burela said the small profit had not come at the cost of research and development of new products, which had increased by $55 million over its 2008 expenditure.

Take those two figures together and Ford's investment in R&D was up from $250m to $305m last year. That is a significant spend. 10% of sales revenue. But, i'd imagine part of that is T6 as well as new Territory, diesel, LiLPG, EcoBoost & FG2.

Don't know of too many other companies in Australia investing $305million a year in R&D.

[Quicksand]

Originally Posted by phillyc

Don't know of too many other companies in Australia investing $305million a year in R&D.

You need to spend money (wisely) to make money. Short term pain, long term gain. <Enter another cliche here>.

Originally Posted by 4Vman

Frighteningly quiet thread for what is one of the most significant good news stories for Ford in a long time...

28 posts in 6 hours? Come on guys, surely we're not just interested in bad news and controversy..

Had it been a loss posted im sure we'd be up to 5 pages by now.. not 1...

It's human nature...we are (sadly) drawn more towards conflict...indeed we seem to thrive on it.

Originally Posted by PhilXY

The usual nay sayers are nowhere to be seen, hence no arguments .

I will admit to being one of those 'naysayers' at some point. Like many others though, my frustration wasn't surrounding Ford simply having more outright sales over its competitors.

For me, it was more the concern that in 'bumper' periods of the year, when other manufacturers exploded in sales, Ford never seemed to 'take off' like others did. Record months and record quarters seemed to have no discernible positive sales impact to Ford.

The concern here was when customers seemed to have money and raised buying confidence during these record periods, they weren't putting their money towards Ford. The concern then was whether this trend would continue when the growth started to be more consistent as opposed to sporadic bumper periods. i.e. the economy is currently on the rise but will Ford rise with it.

After all, why is not not possible for Ford to have higher sales than it's competitors AND make a profit? Is this not possible? Ford US is topping the charts in sales AND is making a profit.

But then in contrast, Ford didn't have the low's that those manufacturers did. Steady and strong seemed to be the order of the day for Ford.

In saying all of this, as a Ford enthusiast with blue blood, i will never be ashamed of being their biggest critic. It is my right as a Ford Fan and as a consumer. As a Ford Fan i am ecstatic at this positive news and feel more assured of Ford's future.

[4Vman]

Originally Posted by Inducted_Breeze

I will admit to being one of those 'naysayers' at some point. Like many others though, my frustration wasn't surrounding Ford simply having more outright sales over its competitors.

For me, it was more the concern that in 'bumper' periods of the year, when other manufacturers exploded in sales, Ford never seemed to 'take off' like others did. Record months and record quarters seemed to have no discernible positive sales impact to Ford.

The concern here was when customers seemed to have money and raised buying confidence during these record periods, they weren't putting their money towards Ford. The concern then was whether this trend would continue when the growth started to be more consistent as opposed to sporadic bumper periods. i.e. the economy is currently on the rise but will Ford rise with it.

After all, why is not not possible for Ford to have higher sales than it's competitors AND make a profit? Is this not possible? Ford US is topping the charts in sales AND is making a profit.

But then in contrast, Ford didn't have the low's that those manufacturers did. Steady and strong seemed to be the order of the day for Ford.

In saying all of this, as a Ford enthusiast with blue blood, i will never be ashamed of being their biggest critic. It is my right as a Ford Fan and as a consumer. As a Ford Fan i am ecstatic at this positive news and feel more assured of Ford's future.

Being profitable and leading the sales are 2 mutually exclusive situations, in many instances the cheaper your product the more you sell.
Its very likely that Holden out sell Ford simply because of price hence the contrasting profitability of both companies.

If both companies had adopted the others strategy there might also be a reversal in sales numbers too.

The encouraging thing is Ford have found a way to be profitable at their current production levels, what this means is they can steadily grow the brand and gain incremental business based on product quality, not price...

Holden have geared their business to NEED volume and can't turn the "sausage machine" off hence their pricing and lack of profitability......

Out of curiosity which of the 2 companies, (Ford and Holden) sold the most cars made in Australia last month???
Which one sold the most SEDANS last month?????

[Quicksand]

Originally Posted by 4Vman

Being profitable and leading the sales are 2 mutually exclusive situations, in many instances the cheaper your product the more you sell.
Its very likely that Holden out sell Ford simply because of price hence the contrasting profitability of both companies.

If both companies had adopted the others strategy there might also be a reversal in sales numbers too.

The encouraging thing is Ford have found a way to be profitable at their current production levels, what this means is they can steadily grow the brand and gain incremental business based on product quality, not price...

Holden have geared their business to NEED volume and can't turn the "sausage machine" off hence their pricing and lack of profitability......

Out of curiosity which of the 2 companies, (Ford and Holden) sold the most cars made in Australia last month???
Which one sold the most SEDANS last month?????

I understand the notion, and agree with the principals. I'm ecstatic with the result and proud of the achievements of Ford. I do not disagree at all with the approach Ford has taken.

It is just interesting that there is a black and white view that you cannot sell the most cars and make a profit. Why not? What economic/business/commercial/etc reason is there for this?

Again, didn't Ford US just achieve this? Admittedly, they were only on the top of sales for April (and another month...can't remember), but if the trend continues they will be selling higher volumes than their competitors using profitable vehicles. I understand it is a different market over there influenced by different situations but i can't believe that it is that black and white here?

What about all of the other concepts that impact sales such as quality, brand loyalty, value, customer service, effective marketing etc. Surely it isn't as simple as 'Ford need to drop $10,000 from the retail price of their cars and start losing money to sell as many units as their competitors'? The above concepts are much harder to implement, but that seems to be the winning approach of Ford US and it is surely 'paying' off for them.

[FPV GTHO]

Originally Posted by Inducted_Breeze

After all, why is not not possible for Ford to have higher sales than it's competitors AND make a profit? Is this not possible? Ford US is topping the charts in sales AND is making a profit.

Its the nature of the US market, in that basically every model line Ford US sells is built in North America due to stupid UAW regulations and pressure. Therefore theyre already geared towards a wide production output. The US market is also incredibly price sensitive, so basically unless youre a top end sports car manufacturer the only way to make money is by selling more units.

[EgoFG]

So here is the 'productivity gives profit' argument:

Holden sell 119,568 vehicles and turn 3.8 billion revenue into a loss of 210.6 million.
OK lets ignore the loss due to the export mistake and call it a profit of 12.8 million

Ford sell 23000 less vehicles (96,501) with 660 million less revenue (ie 3.14 Billion) make the same profit (13 million)

Ford is a more efficient and productive company


Holden: Revenue Per Vehicle Sold: $31,781
Ford: Revenue Per Vehicle Sold: $32,539

Holden: Profit per vehicle sold: $107 (or loss of $1,761 including failed export program)
Ford: Profit per vehicle sold: $135
(of course the profit figures would be skewed by reporting tricks that we would assume both companies use equally)

On average Ford makes 30% more profit per vehicle sold !

[Road_Warrior]

Originally Posted by EgoFG

So here is the 'productivity gives profit' argument:

Holden sell 119,568 vehicles and turn 3.8 billion revenue into a loss of 210.6 million.
OK lets ignore the loss due to the export mistake and call it a profit of 12.8 million

Ford sell 23000 less vehicles (96,501) with 660 million less revenue (ie 3.14 Billion) make the same profit (13 million)

Ford is a more efficient and productive company


Holden: Revenue Per Vehicle Sold: $31,781
Ford: Revenue Per Vehicle Sold: $32,539

Holden: Profit per vehicle sold: $107 (or loss of $1,761 including failed export program)
Ford: Profit per vehicle sold: $135
(of course the profit figures would be skewed by reporting tricks that we would assume both companies use equally)

On average Ford makes 30% more profit per vehicle sold !

That $210 Million loss that Holden made in 2009 included those same (or similar) 'special items' that Ford had to deal with in 2008.

[phillyc]

Originally Posted by Road_Warrior

That $210 Million loss that Holden made in 2009 included those same (or similar) 'special items' that Ford had to deal with in 2008.

It also highlights that Ford is ahead of the game and smarter than it's competitor. Just like it's consumers!

GMH were too dumb, unwilling or unable to change their practices and sailed along with a she'll be right attitude just like their parent company. But looked good / strong to the general public. The reality is they needed a $200M loan from the Australian government, were unable to afford to pay redundancies and have continued to defer the next big thing. The Cruze, 3 times already.

Ford made the right decisions and copped the wrath of the media/public for cutting production and down-balancing. Just like their parent company did.

GM went bust to the tune of $100B and Ford US scraped through whilst heavily investing in future products. Ford US have now started to make sizeable profits.

Finally, notice the words that Burela is using. “Absolute laser focus”. This is a Mulally saying. Very promising.

[Joe5619]

Originally Posted by Road_Warrior

That $210 Million loss that Holden made in 2009 included those same (or similar) 'special items' that Ford had to deal with in 2008.

No they were not... There were COMPLELTY different 'special items'.. Ford where reducancy packages to right size the bussines.. Holdens were losses on a failed export program!!

[Fordman1]

Originally Posted by Road_Warrior

That $210 Million loss that Holden made in 2009 included those same (or similar) 'special items' that Ford had to deal with in 2008.

Nope !

Ford right sized the business and topped up the Superfund ravaged by the GFC.

Holden ? They lost money on unsold inventory and lost business. They will have significant losses this year .. I'll put money on it !

[a_misfit]

Ranger development as well included in that? Or is that funded by Ford US?

[jpd80]

Originally Posted by Road_Warrior

That $210 Million loss that Holden made in 2009 included those same (or similar) 'special items' that Ford had to deal with in 2008.

The big special item was $225 million loss Holden directly attributed to cancelation of Pontiac G8.
Holden also made substantial losses in 2008 and 2007.

[Polyal]

In all honesty I reckon a $13M profit is as good as $130M for FoA in Ford's eyes. If they can atleast pay their way then there is less reason to change things, $100M in Ford NA's coffers wont make to much difference, but it gives FoA something to hang their hat on.

[Nikked]

13m is alot of profit for a small country.

[XR8putts]

Made my day. Stoked!

And it's so bloody good to have it finally confirmed! Wonder what the Holden fanboy's excuse will be now.

Bravo Ford AU.

[dannyhilton]

There you go. Have to say I'm seriously proud of that result, especially considering the market in 2009. I'm hoping with improved sales this year, a better market, and some truly great products can push Ford into the black for a second year running. 2011 however looks like the year of all years for Ford, and while with all the big releases may not see a profit it'll be the year that sets the trend for sales:

- 2.0L EcoBoost Falcon. Opens the market to fuel conscious private sales and a huge potential for fleet sales.
- New LPG engine. Again, private and fleet markets alike will rejoice over this.
- 5.0L V8. It'll be established, and by 2011 should be winning back some market share from the red side.
- Revised Territory. Finally, a decent makeover, and a 2.7L Diesel engine should give the Territory a decent boost.
- New Focus. In Australia's biggest market, the small sedan/hatch combo should win Ford some major market share by the looks of what they've produced.
- Kuga. There's talk that this will be manufactured in Thailand to replace the Escape, if so I'm excited. May not be a huge seller, but great for Ford's image.

Most of this depends on one factor though, can Ford produce the Falcon/Territory/Ute in bigger numbers (lets face it, there's some great potential to increase sales here) and will doing so keep them profitable? They've proved you don't need volume, but two of these new engines will hit a sweet spot with fleets, and with a diesel Territory, private buyers will surely be wanting in on that.

I can't wait to see what Ford comes up with, personally I'm very positive for the future of Ford Australia, and the Falcon.

[dannyhilton]

And Holdens official response to the Ford profit?

http://www.holden.com.au/microsites/...eaderImage#/6/

BAHAHAHAHAHAHAHA! GM had to throw them a lifeline!

[Wretched]

A good result by Ford. Well done, keep it up, you need to.

[Franco Cozzo]

This is great, if Ford AUS keeps turning a profit I suppose it will make us look viable to Ford USA to keep the Falcon.

[fordv8!]

great stuff ford keep it up!

[4Vman]

Frighteningly quiet thread for what is one of the most significant good news stories for Ford in a long time...

28 posts in 6 hours? Come on guys, surely we're not just interested in bad news and controversy..

Had it been a loss posted im sure we'd be up to 5 pages by now.. not 1...

[FlipXW]

Originally Posted by 4Vman

Frighneningly quiet thread for what is one of the most significant good news stories for Ford in a long time...

Had it been a loss posted im sure we'd be up to 5 pages by now.. not 1...

The usual nay sayers are nowhere to be seen, hence no arguments .

Congratulations Ford. Hopefully this is just the first step of recovery and we continue to see profits and more importantly aussie built fords in years to come.

[dannyhilton]

Originally Posted by 4Vman

Frighteningly quiet thread for what is one of the most significant good news stories for Ford in a long time. Had it been a loss posted im sure we'd be up to 5 pages by now.. not 1...

I'm a blue blood Ford guy, but even I can acknoledge most of us like to have a good winge! Seems to be what seperstes us from the dark side, we're hard to please, have high standards and are always wanting Ford to work harder. Most Holden fans have wet dreams over SIDI and couldn't accept their old four speed auto and origional AlloyTech engine combo was shocking.

Give them a Daewoo replacement to their Barina, which was inferior to its Opel based product, and they rejoice. Give us the fantastic Euro based MK7 Fiesta, and we winge about how the boot doesn't have carpet on the back of the seats! HAHA.

[anto]

Originally Posted by 4Vman

Frighteningly quiet thread for what is one of the most significant good news stories for Ford in a long time...

28 posts in 6 hours? Come on guys, surely we're not just interested in bad news and controversy..

Had it been a loss posted im sure we'd be up to 5 pages by now.. not 1...

so true !!

what can I say Ford are awesome !!! I glad Im on the right team

[uranium_death]

Great result by Ford Australia.
For all those clowns wanting XR wagons, coupes, flying-SUVs and time-travelling FPVs, THIS is why you will NOT be getting them.
Ford making smart decisions and knowing their own limits, but working sensibly within them.
With fewer sales than Holden, Ford has posted a better 2009 result. What does that tell you?
It tells you that if you are not satisfied with Ford's result or their range, then feel free to visit the Lion and buy one of their failed projects. Heaven knows they need it.

[barra240t]

Originally Posted by uranium_death

Great result by Ford Australia.
For all those clowns wanting XR wagons, coupes, flying-SUVs and time-travelling FPVs, THIS is why you will NOT be getting them.
Ford making smart decisions and knowing their own limits, but working sensibly within them.
With fewer sales than Holden, Ford has posted a better 2009 result. What does that tell you?
It tells you that if you are not satisfied with Ford's result or their range, then feel free to visit the Lion and buy one of their failed projects. Heaven knows they need it.

That is so spot on! Well said.