EARNINGS : Ford Income Off 8% as Sales Volume Drops

Slower sales pushed Ford Motor Co.’s second-quarter earnings down 8%, the company said Wednesday, predicting depressed profit through early 1996 due to the cost of introducing new vehicles.

The nation’s No. 2 auto maker earned $1.57 billion, or $1.45 per share, in the three months ended June 30, compared to $1.71 billion, or $1.63 a share, a year earlier.

Ford’s vehicle sales volume fell 2% in the quarter, but total revenue rose 8% to $36.4 billion from $33.8 billion a year earlier.

The company blamed the weak results on lower sales volumes in the U.S. market, saying higher interest rates put an unexpected damper on last year’s auto sales boom.

“The interest rate effect was probably greater than we realized,” Ford Vice President David McCammon told a news conference.

Analysts said the sales slowdown and an unusually higher number of new-model introductions will hurt Ford’s earnings in the third quarter. “You ain’t seen nothing yet,” Burnham Securities analyst David Healy said.

Ford’s stock closed down 87.5 cents at $30.125 on the New York Stock Exchange amid a steep drop in the stock market.

In addition to weak auto demand, the higher cost of components in Germany and Japan reduced its earnings, the company said. But Ford said its European operations showed an improved profit and that the firm continued to gain market share in both the United States and Europe.

Ford said it expected second-half results to be dampened by continued lower production, model changeovers, new-product investments and continued exchange rate problems.

The company faces three of the biggest new-product launches in its history over the next few months, including the best-selling Ford Taurus sedan and F-Series pickup truck in North America and the Ford Fiesta subcompact in Europe.

Ford earned $1.1 billion in profit from its worldwide automotive operations, down from $1.2 billion a year ago, while net income from its core U.S. auto unit was $663 million, down from $888 million. In Europe, Ford earned $319 million, up from $167 million a year ago.

Ford’s Jaguar luxury car unit was again profitable during the quarter, and McCammon said he expected the British car maker to remain in the black for the full year.

The auto maker shipped a total of 1.81 million units in the second quarter, down from 1.85 million a year ago. Despite the lower volume, it boosted its U.S. vehicle market share to 26.2% from 25% a year ago and raised its European market share to 12.2% from 11.9%.

For the first six months of 1995, Ford earned $3.12 billion, or $2.89 a share, up 19% from $2.61 billion, or $2.47 a share, one year earlier. First-half revenue totaled $71.2 billion.

General Motors Corp. is scheduled to report its second-quarter results today.