Ford Posts Profit of $338 Million for First Quarter : Autos: The results are a dramatic turnaround from an $884-million loss in the year-ago period.
Ford Motor Co. reported a $338-million profit for the first quarter Wednesday, stamping itself as the first U.S. auto maker to clearly emerge from the industry’s latest crisis.
Ford’s results represented a dramatic turnaround from its $884-million loss in the year-ago period. The price of Ford shares jumped $1.75 to close at $45.625 Wednesday on the New York Stock Exchange.
The gain was the first profit for the world’s second-largest auto maker since the third quarter of 1990, when consumer confidence began to plummet in the wake of Iraq’s invasion of Kuwait.
Ford Chairman Harold Poling said the improved results reflected a surge in orders from dealers for new cars and trucks as well as the benefits of widespread cost-cutting by the company.
But Poling cautioned that “a continuation of the turnaround will depend greatly on a sustained recovery in the United States and other key Ford markets.”
The earnings, equal to 60 cents a share, came on revenue of $24.6 billion. This contrasted with a loss of $1.88 a share in the 1991 period, when revenue was $21.3 billion.
The results were better than analysts expected and included a break-even performance in North America, where Ford lost $947 million in the January to March period a year ago.
Ford’s profit report comes a day after General Motors Corp. reported a surprising first-quarter profit of $179 million. But unlike Ford, GM’s overall earnings masked an estimated $850-million loss on its U.S. vehicle business.
The momentum is climbing in this quarter, said David McCammon, Ford’s finance vice president. He said Ford’s U.S. current production schedules--which are based on orders from dealers--have its plants operating at 105% of normal capacity, versus 81% in the first quarter.
“The second quarter should be a very good quarter,” McCammon said. “The recovery seems to be a little bit stronger.”
Like GM, Ford credited rising retail sales at the expense of rental car sales for creating a much more profitable mix of new-car deliveries. McCammon said that while Ford’s total U.S. car sales were up just slightly, that included a 20% surge in traditional retail sales--the most profitable kind and a better measure of consumer demand--and a 16% drop in fleet sales.
The auto maker’s worldwide automotive operations earned $85 million in the period, contrasted with losses of $1.2 billion a year ago. Its overseas automotive operations earned $28 million in the period, contrasted with $208 million in losses a year ago.
The biggest component of the profit came from the Financial Services Group, which earned $253 million, or 52 cents a share. But that included a $25-million loss by its San Francisco-based First Nationwide Financial Corp., McCammon said.
He said Ford’s Jaguar unit lost nearly $100 million in the quarter, and losses continued in Brazil and Australia.
Ford and GM’s combined first-quarter earnings of $517 million suggest that the worst is over for the beleaguered U.S. auto industry, which had combined losses of $7.5 billion in 1991.
Chrysler Corp. releases its first-quarter results Thursday and is expected to report a loss because of costs in launching new vehicles.
“GM and probably the rest of the industry has turned the corner,” said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan in Ann Arbor.
Auto stocks soared Wednesday in heavy trading. In addition to Ford’s gain, GM rose $1.875 to close at $42.25, and Chrysler jumped 87.5 cents to $19.875 on the New York Stock Exchange. Reuters contributed to this story.
