Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 15, 1991 TAG: 9102150082
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: DETROIT LENGTH: Medium
The losses announced Thursday by General Motors Corp. and Ford Motor Co. and a tiny profit reported last week by Chrysler Corp. were further proof that the auto industry is in dismal shape. Sales are depressed; production levels are tumbling; and showroom traffic has dwindled to a trickle.
"We will have a substantial loss again in the first quarter of 1991," predicted Ford Vice President and Treasurer David McCammon. GM Chairman Robert Stempel also indicated his company may not post a profit for the first three months of this year.
GM, the world's largest automaker, reported a $1.6 billion loss, or $2.89 per share of common stock, for the final three months of 1990. It was the largest operating loss in industry history. During the fourth quarter of 1989, GM earned about $700 million, or $1.01 a share. Revenue, including that from financing and other subsidiaries, slipped to $29.9 billion in 1990 from $31.4 billion the year before.
Ford, the nation's No. 2 automaker, said it lost $519 million, or $1.11 a share, on revenues of $24.2 billion during the 1990 period. In the year-earlier period, Ford earned $314 million, or 68 cents a share, on revenues of $24.1 billion.
For the year, Ford's earnings fell 77.4 percent to $860.1 million, or $1.86 a share, in 1990 from $3.8 billion, or $8.22 a share, the year before. Revenues last year rose slightly to $97.7 billion from $96.1 billion.
The 1990 results mean no profit-sharing checks for the automakers' 450,000 active union-covered employees. Executives will lose their bonuses.
Automakers also are paring down on spending, numbers of employees and, in GM's case, shareholder dividends to cope with the industry's first recession since the early 1980s.
Both companies said their North American automotive operations were hammered by waning demand, incentive costs and anemic consumer confidence.
Auto analyst Doug Laughlin of Bear, Stearns & Co. in New York forecast the first quarter "will probably be worst than the fourth. Production and sales levels both are down."
However, analysts said there may be some hope for a possible upturn later in the year.
"We've had a drop in interest rates and a drop in gasoline prices over the last month or so," said auto analyst David Healy of the investment banker Barclays de Zoete Wedd in New York. "So it's possible that January was the low point.
"Ultimately the auto industry is going to get back to normal," he said. "The real question is when?"
by CNB