Saturday January 14, 2006

S&P cuts Ford rating deeper into junk

channelnewsasia.com :

Ratings agency Standard and Poor's cut struggling automaker Ford Motor Company's credit rating deeper into junk status. The rating downgrade came a day after Ford announced a 9% drop in December sales and a 5% drop in overall sales for 2005. Standard and Poor's cut the credit rating for both Ford and its lending arm, Ford Credit Co. to BB-/B-2 from BB+/B-1 and said the rating outlook was negative.

The agency warned that Ford's North American unit could post as much as a US$2 billion pre-tax loss in 2005. Ford's North American unit posted a US$1.4 billion loss in the first nine months of 2005. In a conference call with analysts, Schultz warned that Ford's prospects are closely tied to those of its larger rival, General Motors Corp., which is at risk of declaring bankruptcy.

Ford has been especially hard-hit by a sharp drop in demand for sport-utility vehicles which have a significantly higher profit margin than many other Ford vehicles. "With SUV demand having plummeted industry-wide, particularly during the second half of 2005, it is now dubious whether even additional new models can be counted on to help restore the company's North American operations to profitability," the agency said.

My Web 2.0 : american auto-makers
Google Base : american auto-makers

(2006-01-14 10:52:38 SGT) [Biz] Permalink

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