Ford Posts Surprise $100M Quarterly Profit
Strong earnings in European and South American operations helped offset the impact of a slumping U.S. economy that cut car and truck sales in its main market.
“Particularly impressive was the continued strength in Europe,” Calyon Securities analyst Mark Warnsman said in a research note, Reuters reported. “The outstanding result in Europe would have meant little, however, if North America had not pulled itself back to close to breakeven.”
The company also said its latest round of early retirement and buyout offers netted 4,200 hourly workers, fewer than it wanted.
Ford reported net income of $100 million, or 5 cents per share, compared with a net loss of $282 million, or 15 cents per share, a year earlier. Revenue fell 8 percent to $39.4 billion, excluding the Jaguar Land Rover unit it is selling to India’s Tata Motors Ltd.
Excluding special items, Ford said it earned $525 million after taxes, or 20 cents per share. That beat Wall Street’s expectations. Thirteen analysts surveyed by Thomson Financial had predicted a loss of 16 cents per share.
On the profitability news, Ford’s stock shot up more than 10 percent in Thursday morning trading.
Ford also lowered its industrywide U.S. vehicle sales forecast for the full year to a range of 15.3 million to 15.6 million, but said it remains committed to returning North America and its whole auto business to profitability in 2009. In January it had expected full-year sales of 16 million.
“The remainder of 2008 will be a challenge but we are cautiously optimistic despite the external challenges,” CEO Alan Mulally said in a statement. “Our plan is working.”
Ford and other U.S. automakers have struggled with market share losses and a dramatic shift in consumer demand away from large sport utility vehicles to cars and smaller crossover SUVs built on passenger car platforms.
Ford, which posted losses of $2.7 billion in 2007 and $12.6 billion in 2006, has been cutting production capacity to match declining market share and meet the shift in demand for smaller more fuel-efficient vehicles.
With truck-heavy vehicle lineups, GM, Ford and Chrysler are feeling the pinch, while Toyota and Honda expand market share.
Last year, Ford was surpassed by Japanese rival Toyota Motor Corp as No. 2 in auto sales in the United States. The slowing U.S. economy and rising gasoline prices have pressured U.S. auto sales in 2008 overall.
Since January 2006, Ford has been restructuring its North American operations. It has shed more than 45,000 employees since 2005, with 4,200 workers signing up to leave the company voluntarily through an early retirement or buyout program.
The reductions mean that Ford has cut more than 34 percent of its work force over the past two years, the Detroit Free-Press reported.
During its ‘Way Forward’ turnaround plan, Ford closed 11 factories in the United States, Canada and Mexico, with three more slated to close through 2010.