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Ford Australia posts $191 million loss

Ford has only posted a profit in three of the past 10 years.
Joshua Dowling

22 May 2015 • 3 min read

The Australian car industry is continuing to bleed red ink on its balance sheets as it prepares to shut down forever from the end of 2017.

The 'blue oval' car brand Ford has ended another year in the red after posting a $191 million loss in Australia in 2014, as its sales fell to a historic 48-year low.

It brings Ford Australia's total losses to a staggering $1.3 billion over the past 10 years, during which time it has received more than $1.1 billion in government funding.

Ford has only posted a profit in three of the past 10 years; the 2014 loss alone evaporates the profit the car maker has reported over an entire decade: $186 million.

Ford says $167.2 million of the $191 million loss was for redundancies and other costs associated with closing its Broadmeadows car factory and Geelong engine and stamping plants in October 2016.

There was one silver lining on the results: the operating loss for the rest of Ford Australia's business amounted to $23.5 million, which is $2 million less than the previous year.

It means Ford has been making more profit per imported vehicle, even though it has been selling fewer cars.

Ford Australia's revenue was $3.1 billion in 2012 and $2.8 billion in 2013 and fell to $2.7 billion in 2014 as vehicle sales fell to their lowest since 1966.

Ford Australia has received more than $1.1 billion in government funding over the past 13 years, including $72 million in 2013 and $47 million in 2014.

But Ford says it spent $367 million on local engineering work for overseas Ford vehicles in 2014, up from $340 million in 2013.

Ford expects to become Australia's largest automotive employer after car manufacturing comes to an end in 2017 (when Holden and Toyota also close their factories), with approximately 1500 designers and engineers developing foreign cars, primarily for China.

"We continue to invest more than any other automotive company in Australia, including $2 billion in research and development over the past six years," said Ford Australia spokesman Wes Sherwood.

The last time Ford sold fewer vehicles than it did in 2014 was in 1966

Holden's financial results for 2014 are due to be released imminently; Toyota Australia's financial results aren't due to be made public until June because the car maker works to the Japanese financial year, which ends on March 31.

The last time Ford sold fewer vehicles than it did in 2014 was in 1966, the same year Australia introduced decimal currency and Robert Menzies handed the Prime Minister's office to Harold Holt.

Ford sold 79,703 vehicles in 2014 according to figures from the Federal Chamber of Automotive Industries, compared to 83,197 in 1967 and 68,520 in 1966, according to figures from Australian Automotive Intelligence which has archived Bureau of Statistics data.

Ford sold more than 100,000 vehicles every year from 1970 to 2008, but has been in a continuous sales slide since 2005.

The 2014 tally is less than half Ford's peak of 30 years ago: 170,811 sales in 1985.

Ford has a raft of new models around the corner -- including the first factory-built right-hand-drive Mustang in 50 years -- and plans to introduce 20 new vehicles by 2020, doubling the range of 10 vehicles it sells today.

But executives stopped short of saying Ford would return to market leadership and admitted it could take another two years before sales turn around.

Ford's balance sheet, turnover, and vehicles sales by year:
2005: + $148.2m $3.9bn 129,140
2006: - $40.3m $3.3bn 114,965
2007: - $87.2m $3.3bn 108,071
2008: - $274m $3.29bn 104,715
2009: + $13m $3.14bn 96,501
2010: + $24.9m $3.3bn 95,284 — $116m govt assistance
2011: - $290m $2.8bn 91,243 — $102m govt assistance
2012: - $141m $3.1bn 90,408 — $112m govt assistance
2013: - $267m $2.8bn 87,236 — $72m govt assistance, ninth year of sales decline, lowest sales in 22 years
2014: -$191m, $2.7bn, 79,703 -- $47m govt assistance, 10th year of sales decline, lowest sales in 48 years