Limited supplies of Ford's Ranger ute has contributed to a considerable loss this financial year.
Despite $102 million of state and federal government support last year, Ford Australia recorded its biggest financial loss in decades – and possibly the largest in its history.
Figures for 2011 released today show Ford Australia made a $78 million operating loss and a one-off “tax impairment and accounting adjustment” of $212 million for a total loss of $290 million.
The previous worst result on record was in 2008 when the company reported a loss of $274 million; it posted modest profits of $13 million in 2009 and $26 million in 2010.
Ford admits it may be the company’s worst financial loss; it says it only has readily accessible data dating back to 1997, although the Ford Discovery Centre website has financial records going back to 1981.
The president of Ford Australia, Bob Graziano, said the company was impacted by the payout of 250 factory workers made redundant, the continued decline in demand for Falcon, and limited supply of the Ranger utility that was supposed to be the brand’s bread-winner for the year.
The Ford Focus small car, that was supposed to be built locally but will instead be imported later this year from Thailand under a Free Trade Agreement, is now the company’s top-seller.
Graziano, who described 2011 as a “year of change for Ford Australia”, said: “We did incur a significant cost to the business but it was the right thing to do. Our plan remains … aligned to the global One Ford plan, which includes aggressively restructuring to operate profitably.”
Ford Australia chief financial officer Mark Rearick, said: “The tax impairment relates principally to tax losses that were generated in the current year as well … as well as brought forward from prior years.
“Instead of continuing to carry those losses forward on our balance sheet, we’ve come to the conclusion that we think the appropriate action is to actually bring those assets back down off the balance sheet.
“And that means they have to hit our net income. That doesn’t mean we pass on the right to be able to claim those back in the future. So this is more a book accounting entry.
“It’s not really reflective of our current business, it’s really cleaning up up the balance sheet for a number of assets that we’ve been carrying for a period of time.”
Ford Australia’s revenue fell from $3.3 billion in 2010 to $2.8 billion in 2011.
Last year was the seventh year in a row of sales decline for Ford Australia. The total number of vehicles sold (85,228) was down by 37 per cent from its previous-decade peak of 135,172 sales in 2004.
“While total vehicle sales were down we did … concentrate our sales into higher margin [models],” said Rearick. “The industry-wide decline in large car sales was … partially offset with small and medium cars.”
Despite the tough economic conditions Ford said it invested $282 million last year in research, development and facilities for local as well as global vehicle programs.
Over the past five years it had invested $1.7 billion on research and development, compared to $1.3 billion by General Motors Holden in the same period.
Ford said the $102 million of government support it received accounted for 3.6 per cent of the company’s revenue.
“We’re confident we’re making the right decisions, albeit tough decisions,” Graziano said.
When asked when Ford Australia would bounce back into profitability – or end its seven-year sales decline, Graziano said: “All we can do is continue to market the vehicles that we have. You’ve got a really competitive marketplace here and the customer has a terrific choice of vehicles to pick from.”
In his speech as the president and chairman of the Federal Chamber of Automotive Industries on Tuesday night, Graziano said: “We can’t ignore the fact that Australia has the most open automotive market of all advanced economies.”
He said there are more than 62 brands selling about 360 models sourced from more than 28 nations.