Ford Doesn't Expect Profit Until Next Year : Autos: The prediction comes as a surprise to analysts and raises doubts about the health of the entire industry.

Ford Doesn’t Expect Profit Until Next Year : Autos: The prediction comes as a surprise to analysts and raises doubts about the health of the entire industry.

L.A. Times Archives

Oct. 10, 1991 12 AM PT

From Associated Press

DETROIT — Ford Motor Co. raised more doubts about the domestic auto industry’s prognosis for health Wednesday by disclosing that it doesn’t expect to make any money until next year, later than forecasters had expected.

Ford, which only a few years ago was one of the most profitable American industrial corporations and recently declared that the recession appeared over, said in a prospectus for a new stock issue that it anticipates a third-quarter loss bigger than the second-quarter loss of $323.5 million.

Ford lost $1.2 billion in the first half of this year.

“Because the pace of the economic recovery in the United States has been slower than had been anticipated, Ford also would expect to report a loss for the fourth quarter,” the prospectus said.

The prospectus gave no indication of what the anticipated loss would be. Wall Street analysts had forecast that General Motors Corp., Ford and Chrysler Corp. would break even or show a modest profit in the fourth quarter after five straight quarters of losses.

Collectively, the Big Three lost $3.2 billion in the first half of this year and they appear heading to their worst financial year in history, victims of a profound slump in car and truck purchases. Back in 1980, during the depths of a deep recession, the three companies lost a combined $4.5 billion.

Ford’s disclosure of a probable fourth-quarter 1991 loss suggested that the other auto makers would probably report similar results.

“I don’t anticipate that Ford will be alone in reporting a (fourth-quarter) loss,” auto analyst Steven Girsky of PaineWebber Inc. said Wednesday. “I think GM will be close by.”

Ronald Glantz, an auto analyst for Dean Witter Reynolds Inc. in San Francisco, agreed. He said the Ford losses stem partly from rebates the auto maker is using to woo buyers. Last month, Ford said it would give them between $500 and $1,000 for purchases of 1992 models.

“Most analysts were looking for (Ford) rebates in the fourth quarter to be lower than in the fourth quarter in ‘90,” he said. “When the rebates were announced in September, I cut my earnings estimate.”

Also last month, Ford executives painted what seemed like optimistic economic pictures. Ford Division General Manager Ross Roberts was so sure of conditions improving that on Sept. 17 he stated: “We really do believe the recession is over.”