Financing arm nearly triples Ford profit

But auto division records a loss due to strong euro, fuel-cell investment

July 21, 2004|By BLOOMBERG NEWS

DETROIT - Ford Motor Co.'s profit in the second quarter almost tripled to $1.17 billion, bolstered by record earnings from vehicle loans. The No. 2 U.S. automaker forecast profit for the current quarter to be below analyst estimates.

Net income was 57 cents a share, up from $417 million, or 22 cents, a year earlier, Ford said. Revenue rose 5.5 percent to $42.8 billion.

Chief executive William Clay Ford Jr., 47, is being helped by cost reductions and loans made by its Ford Motor Credit unit, which produced three-fourths of earnings in the quarter.

Ford's car-making business had a pretax loss, reflecting costs from a fuel-cell investment, and the company lost money on a European unit that sells luxury brands such as Jaguar.

"While the quarterly profit is good, you'd like to make more of it from selling cars than from financing cars," said Dan Poole, vice president of equity research at National City Corp. in Cleveland, which manages $23 billion, including Ford shares.

Earnings excluding some costs, including restructuring an investment in Ballard Power Systems Inc., were $1.3 billion, or 61 cents. On that basis, Ford was expected to earn 50 cents a share, the average of 15 analysts surveyed by Thomson Financial.

Ford predicts its third-quarter profit will be between break-even and 5 cents a share, excluding some costs. On that basis, analysts expected 15 cents a share. The company also forecast full-year earnings of $1.80 to $1.90 a share, excluding some costs, slightly below analysts' estimates.

Ford shares dropped 38 cents, or 2.5 percent, to $14.60 yesterday on the New York Stock Exchange. They've gained 33 percent the past year.

Net income at Ford Motor Credit more than doubled to $897 million, the most ever in a quarter, from $401 million, and the company's automotive operations had a pretax loss of $57 million, mostly reflecting $120 million of costs related to Ballard.

A year earlier, the company had pretax profit of $3 million from making cars and trucks. Worldwide automotive sales rose to $36.7 billion from $34.1 billion.

Ford is pushing sales of F-Series pickup trucks, its most profitable vehicles, and expects new models, including a redesigned Mustang, to help boost its profit in the second half of this year.

The company's North American auto unit, its largest, reported a pretax profit of $455 million, compared with a $445 million profit a year ago. The company said it sold models with more options and features, but unit sales fell.

Ford had European pretax profit of $211 million compared with a year-ago loss of $525 million. The automaker has cut jobs in Britain, Germany and Belgium in the past year to reduce losses.

Premier Automotive Group, which includes European-based luxury brands Land Rover, Jaguar and Volvo, reported a pretax loss of $362 million, compared with pretax profit of $166 million a year ago. The results were hurt by the rise in the euro against the dollar and costs to introduce new models, Ford said.

Net income for the latest six months more than doubled to $3.12 billion, or $1.51 a share, from $1.31 billion, or 67 cents. First-half revenue rose 7.5 percent to $87.5 billion from $81.4 billion.

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