Australia is reporting a record loss of A$290 million ($292 million) for 2011, despite receiving A$102 million ($102.7 million) in federal and state subsidies.
Published figures show the auto maker saw a A$78 million ($78.5 million) operating loss last year and a one-off “tax impairment and accounting adjustment” of $212 million ($213.4 million).
Melbourne’s The Age newspaper saysAustralia’s last such record was set in 2008 when the company reported a loss of A$274 million ($275.8 million).
The auto maker’s 2011 financial results stand in stark contrast to its A$13million ($13.8 million) profit in 2009 and A$26 million ($27.6 million) profit in 2010.
Ford Australia President and CEO Bob Graziano tells the Sydney Morning Herald the company’s bottom line last year was affected by the payout to 250 laid-off plant workers; continued decline in demand for the locally built Falcon large car, whose sales were down 36.5% to 18,741 units in 2011; and limited supply of Ranger pickups due to floods in Thailand.
The locally built Ford Territory SUV and Falcon are being outsold by the Focus small car, which is imported from Germany. Sourcing of the Focus is about to switch to Thailand in a move that will lower the auto maker’s costs, he says.
It also was a year of change for Ford in Australia, Graziano says.
“We did incur a significant cost to the business, but it was the right thing to do,” he says. “Our plan remains…aligned to the global One Ford plan, which includes aggressively restructuring to operate profitably. We’re confident we’re making the right decisions, albeit tough decisions, for the future of our business.”
Ford Australia Chief Financial Officer Mark Rearick tells local media the tax impairment relates principally to tax losses that were generated in 2011 and brought forward from prior years as well.
“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,” he says.
“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 the balance sheet for a number of assets that we’ve been carrying for a period of time.”
Ford Australia’s revenue fell to A$2.8 billion in 2011 from A$3.3 billion in 2010 on sales of 85,228 vehicles. Government subsidies accounted for 3.6% of revenue. The auto maker says it spent A$282 million ($286 million) last year in research, development and facilities for both local and global vehicle programs.
Ford’s 2011 loss contrasts with GM Holden’s A$90 million ($91 million) profit for the year, which was down from A$112 million ($114 million) from 2010.
Graziano tells reporters 2012 is expected to be another challenging year for Ford in Australia. “We’re moving forward with an emphasis on more fuel-efficient vehicles, and we’re seeing positive share increases for Fiesta, Focus, Mondeo and Territory.”