Ford Posts $100 Million Profit, Defying Loss Forecast (Update1)
By Bill Koenig
April 24 (Bloomberg) -- Ford Motor Co., the world's third- largest automaker, reported an unexpected first-quarter profit of $100 million as reduced North American expenses made up for falling U.S. sales.
Net income of 5 cents a share compared with a loss of $282 million, or 15 cents, in last year's first quarter, Dearborn, Michigan-based Ford said in a statement today. Analysts had forecast a loss. Revenue rose 1.2 percent to $43.5 billion.
The results show Chief Executive Officer Alan Mulally may be on the verge of the turnaround promised when he was hired from Boeing Co. in September 2006. Before today, the automaker had just one quarterly profit in the past two years while posting $15.3 billion in combined annual losses.
``There are signs of progress that Ford just may, in fact, be fixable,'' Brian Johnson, a Lehman Brothers analyst in New York, said in an interview before earnings were released.
Excluding costs the company considers one-time expenses, the profit was $525 million, or 20 cents. On that basis, Ford was expected to report a loss of 15 cents a share, the average estimate of 13 analysts surveyed by Bloomberg.
Ford's pretax loss in its North America region narrowed to $45 million from $613 million a year ago. Pretax profit rose to $257 million in South America from $113 million. It increased to $739 million for Ford of Europe from $219 million. The company's operations in Asia Pacific and Africa posted a pretax profit of $1 million after a $26 million deficit a year earlier.
Ford rose 4.9 percent to $7.89 before regular New York Stock Exchange composite trading.
Ford Credit
Ford Motor Credit, the automaker's consumer-finance unit, said its net income fell to $24 million in the first quarter from $193 million a year earlier.
Ford has cut 46,300 jobs in North America the past two years and in 2007 negotiated a new labor contract to reduce its U.S. labor expenses. Most of the cost savings of the new accord with the United Auto Workers haven't kicked in.
That agreement calls for Ford to shed retiree health-care obligations to a union-run fund that will be formed 2010. Ford said today an additional 4,200 UAW-represented employees in the U.S. accepted buyouts during the first quarter.
Under Mulally, Ford borrowed $23.4 billion in late 2006 to ensure it had enough cash to develop new cars and trucks, close plants and finance buyouts and early retirements of U.S. factory workers.
``They locked in a lot of these credit agreements before lending standards got raised too much and credit prices went up too much,'' said Pete Hastings, a Morgan Keegan & Co. fixed- income analyst in Memphis, Tennessee, said.
Ford's North American auto division has been the main source of the company's losses the past two years while Ford of Europe and other units have reported profits.
``They do have a very strong lineup if you look at their European sales results,'' Johnson said.
Ford's U.S. sales of cars and light trucks fell 9 percent during the quarter compared with an industrywide decline of 8 percent.
To contact the reporter on this story: Bill Koenig in Dearborn, Michigan, at wkoenig@bloomberg.net
Last Updated: April 24, 2008 07:44 EDT
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