Ford has record third-quarter earnings 64% gain to $1.13 billion tops analysts' forecasts

October 16, 1997|By NEW YORK TIMES NEWS SERVICE

DEARBORN, Mich. -- Ford Motor Co. reported sharply higher third-quarter earnings yesterday, as improved results in Europe and South America and strong sales of big sport utility vehicles more than offset weaker car loan profits and big discounts on car sales.

Ford earned $1.13 billion, or 90 cents a share, in the third quarter, beating analysts' expectations of 83 cents a share. It was Ford's best showing ever in the third quarter, traditionally the weakest period in the American auto industry.

Profit was up 64 percent from a year earlier, when Ford earned $686 million, or 56 cents a share. Third-quarter sales rose to $36.10 billion from $33.96 billion the year before.

Ford's stock fell 43.75 cents yesterday to $49.125, but is still up 52 percent this year. Ford executives said the earnings showed that the company continued to grow healthily.

"It's a good, strong quarter for us -- this is the sixth quarter in a row we've had improved results compared with the prior year," said John M. Devine, Ford's chief financial officer.

Ford's financial services divisions suffered a sharp drop in profits in the third quarter, to $491 million from $671 million a year earlier. The drop partly reflected the fact that one division, USL Capital, earned $117 million a year earlier and has since been sold. But profits also dropped at Ford's car loan and lease subsidiary, Ford Motor Credit, as bad loans piled up while weakening prices for used cars made it more expensive to dispose of cars that are returned to the automaker after leases expire. Earnings climbed steadily from Ford's stakes in Associates and the Hertz Corp., the auto rental company.

The financial services problems were outweighed in the profit statement by gains at Ford's automotive operations, which earned $634 million, up from $15 million a year earlier.

The biggest single change in Ford's overall profitability in the third quarter came from a turnaround in its South American operations, which earned $133 million after losing $226 million a year earlier. Ford's sales rose 80 percent in Brazil and Argentina from a year earlier.

Ford pared its losses in Europe to $147 million from $472 million a year earlier, as sales rose and the company continued to cut costs.

But profitability weakened in Ford's core automotive business in the United States, falling to $485 million from $634 million a year earlier. Ford attributed most of the $149 million decline to a one-time reduction in its tax rate during the third quarter of last year.

Pub Date: 10/16/97

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.