Ford Sales Drop, Rising Costs Hit Profit

[Marc]

From Reuters

DETROIT (Reuters) - Ford Motor Co. on Wednesday posted a 38 percent drop in quarterly earnings, pressured by falling U.S. sales and rising costs, and further cut its North American production to bring down excess inventories.

Earnings were substantially higher than Wall Street had expected, but the No. 2 U.S. automaker Ford affirmed its full-year outlook for earnings of $1.25 to $1.50 per share. The second-largest U.S. automaker had slashed its full-year earnings outlook on April 8 for the second time in less than a month.

Ford's first-quarter profit fell to $1.21 billion, or 60 cents a share, from $1.95 billion, or 94 cents a share, in the year-ago quarter.

Ford said that excluding special items, it earned 62 cents a share.

On that basis, Wall Street analysts on average expected Ford to earn 38 cents a share, according to Reuters Estimates.

Ford said that for the second-quarter its expects results to be in a range from a loss of 15 cents a share to break even, excluding special items.

Ford is wrestling with the same problems -- including rising health care and raw material costs -- that caused No. 1 automaker General Motors Corp on Tuesday to post a first-quarter net loss of $1.10 billion, its worst result since it skirted bankruptcy in 1992.

Both companies, which have been losing crucial U.S. market share to foreign rivals, face the risk that their credit ratings will be downgraded to "junk" status at any time and are under heightened pressure to cut costs.

During the first quarter, Ford said its core auto operations earned $579 million before taxes and excluding charges, while its finance arm contributed $710 million.

Revenue rose to $45.1 billion from $44.7 billion in the year-ago quarter.

The automaker cut its second-quarter North American vehicle production by 3.7 percent to 905,000 units, from its previously announced target of 940,000 units.