Ford Motor Co lost a staggering US$12.7 billion last year -- an average of US$1,925 for every car and truck it sold and the worst loss in the company's 103-year-history.
The company that invented the assembly line and whose name was a byword for the auto industry warned it will bleed cash for two more years before it has a shot at making money.
Ford's loss, reported on Thursday, came amid slumping demand for sport utility vehicles and other gas guzzlers and huge restructuring costs tied in part to the planned closure of 16 plants.
Last year's loss surpassed Ford's old record of US$7.39 billion set in 1992.
A fourth-quarter loss of US$5.8 billion helped drive up the red ink, which for the year amounted to US$6.79 per share versus a profit of US$1.44 billion, or US$0.77 a share, in 2005.
Although huge, the losses were far from the largest quarterly or annual corporate deficits on record -- Time Warner Inc reported a US$97.2 billion loss in 2002, largely due to new accounting rules about how to value assets. Ford could not rely on accounting rules, however, to explain its total.
Ford's loss also was not the worst annual total in the auto industry. General Motors Corp lost US$23.4 billion in 1992, due mainly to accounting rule changes on health care liabilities.
The Dearborn-based company predicted more losses for this year and next, but Ford said its restructuring plan is on track to return to profitability in 2009.
"We know where we are. We are dealing with it and we're on plan," chief executive officer Alan Mulally told reporters and industry analysts in a conference call.
Several analysts said the loss was not surprising, given Ford's high costs and falling market share and sales. Ford's future is cloudy at best, given the deficit that it must overcome, analysts said.
"They have a massive challenge in front of them. Their basic business is billions of dollars in the red," Burnham Securities analyst David Healy said.
Ford, which lost US$6 billion on North American operations alone, said it expected to burn up US$10 billion in cash to run its business through 2009 and spend another US$7 billion to invest in new products.
The fourth-quarter loss was the worst final-quarter loss in Ford's history and its second-worst quarterly performance. Ford lost US$6.7 billion in the first quarter of 1992.
Excluding special items, Ford lost US$1.50 per share in all of last year, worse than Wall Street predicted. Fourteen analysts surveyed by Thomson Financial expected a loss of US$1.35 per share, excluding special items.
Chief financial officer Don Leclair said that Ford expected favorable results from its automotive business next year.
But because of interest on its debt, "total automotive results are expected to be worse in 2007 than in 2006," he said.
Leclair said the company finished last year with US$33.9 billion in cash available for its automotive operations.
The company is on target to achieve its goal of cutting US$5 billion in annual costs by next year, compared with 2005, he said.