Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 12, 1991 TAG: 9104120972
SECTION: BUSINESS PAGE: B-5 EDITION: EVENING
SOURCE: Associated Press
DATELINE: DETROIT LENGTH: Medium
But Detroit's third shoe dropped on Thursday as Ford, saying business conditions were tougher than those usually encountered when car sales are soft, cut its quarterly payout nearly in half.
Directors meeting at Ford headquarters in Dearborn, Mich., declared a second-quarter dividend of 40 cents a share, down from 75 cents, which had been paid since the first quarter of 1989.
A dividend cut had been expected by the nation's No. 2 automaker, and on the New York Stock Exchange Thursday, Ford's shares were unchanged at $31.875.
The precedent for cutting dividends began in February, when General Motors Corp. cut its quarterly payout by 47 percent. Last month, the Chrysler Corp. halved its dividend. Ford's action on Thursday was its first dividend reduction since 1982-83, when the auto maker eliminated the payout for six quarters.
Harold Poling, the chairman and chief executive, acknowledged that Ford's goal had been to maintain the dividend through the current downturn, which was expected after several years of strong vehicle demand.
"But the situation we face today," he said in a statement, "is much more than a normal trough in the business cycle and in automotive earnings. The automotive industry is in the midst of one of the toughest and most challenging periods it has ever confronted."
Starting when the Big Three posted huge fourth-quarter losses in February, several automotive analysts have contended that the magnitude of the losses could not be explained by lower sales alone.
Also hurting profitability are increasing competition by the Japanese, particularly from their American assembly plants, and the rising cost of meeting regulations on clean-air, safety and fuel efficiency.
by CNB