(The following statement was released by the rating agency)
LONDON, Oct 25 - Standard & Poor's Ratings Services said today that is has lowered its long-term corporate credit ratings on Ford Motor Co. and its financial subsidiary, Ford Motor Credit Co. to triple-'B' from triple-'B'-plus on continued concerns about the adequacy of Ford's ongoing restructuring.
Standard & Poor's said that it has removed its long-term ratings on Ford from CreditWatch, where they had been placed on Oct. 16, 2002. The 'A-2' short-term ratings on the company, which were not on CreditWatch, were affirmed. The outlook is now negative.
The company's consolidated debt outstanding totaled $162 billion at Sept. 30, 2002. Standard & Poor's noted that its long-term ratings on Ford's 100%-owned Hertz Corp. unit remain on CreditWatch with negative implications.
"The downgrade primarily reflects concerns about the adequacy of restructuring measures being implemented by Ford to restore the competitiveness its core automotive operations," said Standard & Poor's credit analyst Scott Sprinzen. Ford has been pursuing its extensive revitalization plan, announced in January of this year, following the company's dismal operating performance in 2001. Significant progress has been made in certain areas such as the enhancement of product quality measures. A turnaround has already been effected at Ford's automotive operations in Europe. Furthermore, largely reflecting stronger-than-anticipated industry demand, Ford has been exceeding its modest initial goal of consolidated pretax breakeven earnings in 2002.
Even so, Ford's automotive operations remain unprofitable in aggregate. Said Mr. Sprinzen, "Standard & Poor's is concerned that the benefits of Ford's restructuring could eventually be offset by decreasing industry demand in North America, industrywide intensification of price deterioration--partly resulting from aggressiveness by General Motors Corp.--and Ford's market share weakness." In addition, although an important element of Ford's long-range plan has been expansion in relatively high-margin luxury vehicles, the performance of the brands within its Premier Automotive Group has been mixed.
Standard & Poor's said that its ratings on Ford could be lowered further if at any point Standard & Poor's comes to doubt that Ford will be able to sustain some earnings improvement, including the achievement of at least breakeven pretax earnings in its automotive operations (excluding Ford Credit) in 2003.