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Jalal Pirzada: CEO Maria Legos: COO Colleen McDonald: CFO PowerPoint Presentation
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Jalal Pirzada: CEO Maria Legos: COO Colleen McDonald: CFO

Jalal Pirzada: CEO Maria Legos: COO Colleen McDonald: CFO

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Jalal Pirzada: CEO Maria Legos: COO Colleen McDonald: CFO

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  1. Jalal Pirzada: CEO Maria Legos: COO Colleen McDonald: CFO

  2. Overview • Industry: Auto & Truck Manufacturers • Ford #2 maker of cars and trucks. • Major competitors: DaimlerChrysler, General Motors, and Toyota. • Ford makes vehicles under Aston Martin, Ford, Jaguar, Lincoln, Mercury, and Volvo brands. • Owns a stake in Mazda and has purchased BMW’s Land Rover SUV operations. • Hertz car rental, it has an auto finance company, Ford Motor Credit, and owns QualityCare and Kwik-Fit automotive services. • The Ford family owns about 40% of the firm’s voting stock / Ford’s employees own 20%.

  3. History

  4. Vision To be the world’s largest consumer company for automotive products and services.

  5. Mission We are a global family with a proud heritage, passionately committed to providing personal mobility for people around the world. We anticipate consumer needs and deliver outstanding products and services that improve people’s lives.

  6. Strategic Objectives • To build strong lasting relationships with our customers and grow our business. • To improve the fuel economy of our sport utility vehicles 25% by 2005. • To continue to be a positive contributor to the community. • To create family service and learning centers at our facilities in the United States in partnership with the United Auto Workers Union. • In 2002 will launch “Tire Pressure Monitoring System”

  7. Strategic Objectives (cont..) • To become a consumer focused team. • To view our customer business from a customers perspective. • To create an “early warning system” for tire information • To introduce at least 45 new products in the next five years. • To improve our performance in South America

  8. Financial Objectives • We plan to continue to deliver superior shareholder returns into the future. • To be in the top quartile of the Standard & Poor’s 500 for share holder returns. • To achieve more than 4% return on sales in North America. • To achieve more than 1% return on sales in Europe.

  9. Financial Objectives (cont..) • To save $200m in the next 2 years with our Consumer Driven 6-Sigma. • To reduce total costs by $1 billion. • To contain capital spending at $8b or less. • To improve returns and grow earnings 10% of Ford’s credit. • To increase revenue $5 billion.

  10. Strengths • Ford Focus and F-Series best selling car and truck in the world • #4 Fortune 500, S&P 500, #89 FT Global 500 • Ford corporate umbrella strong brand names: Aston Martin, Ford, Jaguar, Lincoln, Land Rover, Mercury, 33% Mazda and Volvo • US #1 auto finance company (Ford Motor Credit) & Quality Care • Hertz #1 car rental firm in the world • Kwik-Fit and Automobile Protection Corporation (APCO) • Sold 7424 000 Cars & Trucks up 204 000 units from 1999

  11. Weaknesses • Decrease in Automotive cash of $5b in 2000 compared to 1999 due bought back shares • Visteon had a $2.3 billion loss due to carrying value was more than fair market value • 6.5 million tires recalled, Bridgestone /Firestone controversy increased higher warranty costs • Assets impairment and restructuring costs in Europe $1019m of Ford brand operations

  12. Weaknesses (cont..) • South America lost $240m in the automotive sector • Write down of assets associated with Nemak Joint Venture $133 million • Inventory related profit reduction Land Rover $106m

  13. Opportunities • Implementing a long term European Turnaround strategy • To become an industry leader we will address environmental issues • View our business from the customers perspective; “transaction” mentality to a “relationship” headset

  14. Opportunities (cont..) • Ford.com & FordDirect.com • Wingcast will bring wireless, digital information and entertainment services directly into our cars and trucks • Web portal launched with GM, DaimlerChrysler, Bell, and Howell to make distribution of service parts faster and more efficient

  15. Threats • Difficult economic conditions • Tougher competition • Rapidly advancing technology • Stricter regulations • Changing marketplace • Increasing demands from a variety of stakeholder groups

  16. Market Data: Ford 2000 • HQ: Dearborn, MI • Employees: 345 911 • NYSE: F • 52-Week High: $58.40 Low: $22.75 • Shares Outstanding (M): 1837 • Market Value (M): $43 059.3 • Total Consolidated Revenue: $170.06 Billion, Up 6% from 1999

  17. Ford Motor Wall Street Consensus

  18. Financial Ratios Analysis Profitability Ratios 1. Gross Profit Margin = Measures how much of each sales dollar earned use to cover operating expenses and profit Gross Profit Margin = Sales – COSG / Sales 170064 – 140499 / 170064 = 26.76%  Ford = 26.76% Industry = 27.79% Ford’s every one dollar of sales, it has 27 cents left to cover operating costs and profit.

  19. Profitability Ratios 2. Profit Margin = Measures the percentage of profits earned per dollar of sales Profit Margin = (Net Profit / Net Sales) x 100 (3467 / 170064) x 100 = 2.04% Ford = 2.04% Industry = 1.47% Ford makes 2 cents for every $1.00 dollar of sale.

  20. Liquidity Ratios 1. Current Ratio = Measures how much current assets are available to meet its maturing short term obligations Current Ratio = Current Assets / Current Liabilities 39310 / 43327 = 0.91 Ford = 0.91:1 Industry = 1.99:1 Ford has 91 cents of current assets to meet $1.00 of its current liability.

  21. Liquidity Ratios 2. Quick Ratio = Measures company’s ability to pay off short-term obligations without relying on the sales of its inventories. Quick Ratio = Current Assets – Inventories / Current Liabilities 39310 – 7514 / 43327 = 0.6 Ford = 0.6:1 Industry = 1.4:1 Ford has 60 cents of Quick Assets to meet $1.00 of its current liability.

  22. Leverage Ratios • Interest Coverage Ratio = is the measurement of how many times interest payments could be made with a firm’s earnings before interest expenses and taxes are paid Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) over Interest expense EBIT = 5529 + 1383 + 9519 + 2705 = 19136 Interest Expense = 1383 + 9519 = 10902 19136 / 10902 = 1.7 Ford = 1.7Industry = 2.1 Ford compared to industry is less solvent and can only meet interest obligation little less than twice a year.

  23. Leverage Ratios 2. Debt-To-Equity Ratio = Measures how much funds provided by Creditors versus Owners. Higher Debt to Equity ratio means that creditors have more stake and risk then shareholders. Debt-To-Equity Ratio = Total Debt / Total Stockholders’ Equity 166279 / 18610 = 8.90 Ford = 8.90 Industry = 2.10 Ford has $8.90 of LT debt for every $1.00 of equity.

  24. Activity Ratios 1. Days of Sales Outstanding = Measures how long in days it takes a company to convert its sales receivables into cash Days of Sales Outstanding = (Accounts Receivables / Sales) 365 6272 / 170064 x 365 = 13.28 Ford = 13 Days Industry = 121 Days It takes 13 days for Ford to covert its receivables into cash while it takes 121 days for the industry.

  25. Activity Ratios 2. Inventory Turnover Ratio = Measures firm’s efficiency in terms of how fast can a company move its inventory in a year Inventory Turnover = Net Sales / Inventory 170064 / 7514 = 17.9 Ford = 17.9 Industry = 8.9 Ford is able to rotate its inventory in sales 18 times in a fiscal year.

  26. Recommendations • Shift from Transactional view to Customer relationship • #2 South Korea car maker DAEWOO MOTOR • Acquisitions Land Rover, Kwit-Fit and spin off costsloss Viseton and High Unusual Items losses Assets Impairment & Restructuring. Further Purchases put on HOLD. Debt is expensive then equity • Think cars available at Avis and other nations wide car rentals