Financial Group Pushes Ford’s Quarterly Earnings Up 21%

Ford Motor Co. said Wednesday that its second-quarter earnings rose a surprisingly strong 21%, driven by record profit from its financial services unit.

The nation’s second-biggest auto maker earned $1.9 billion, or $1.60 a share, in the April-June period, compared with $1.57 billion, or $1.45 a share, in the second quarter of 1995.

Revenue totaled $37.9 billion, up 4% from $36.4 billion a year ago.

Profit from Ford’s automotive operations was up just less than 1%, but earnings at its financial services unit increased 68%.

The results far exceeded analysts’ expectations. The average estimate of Wall Street analysts was $1.21 a share.

“It looks good,” said Stephen Girsky of Morgan Stanley & Co. in New York. “They’ve made significant progress, and there’s evidence the company’s really turned from what it posted in previous quarters.”

The results include a one-time, after-tax net gain of $213 million. Ford recorded a $650-million gain from the initial public offering in Associates First Capital Corp., its consumer finance unit. That was offset by a $437-million charge related to its purchase of Budget Rent a Car.

Chairman Alex Trotman said Ford was on track toward its goals.

“With the concurrent high-volume launches in Europe and North America mostly behind us, and savings coming from improved efficiencies and cost reductions, a strong second half should lie ahead, assuming industry volumes remain in line with expectations,” Trotman said.

U.S. auto operations earned $697 million, up $45 million over a year ago, despite a small drop in sales of cars and trucks. Overseas auto operations earned $411 million, down $26 million, on lower sales in Europe and Brazil.

Overall, Ford’s car and truck sales were flat for the quarter at 1.8 million units.

“Automotive profitability is improving but is not where we want it to be,” Ford Chairman Alex Trotman said. “Substantial progress has been achieved this year, and we fully expect more efficiencies will be realized throughout our business in the coming quarters.”

Trotman said demand for the redesigned 1997 F-150 pickup, introduced at midyear, remains strong, with two more plants scheduled to begin producing the trucks soon. The F-150 has been the nation’s best-selling vehicle for more than a decade.

Ford’s Financial Services Group earned $795 million, compared with $472 million a year ago. Even without the one-time gain, its profit would have set a record, thanks to higher loan volume and improved margins.

Chrysler Corp. reported record second-quarter profit last week, while General Motors Corp. said Tuesday that earnings fell 17% because of the costs of spinning off its electronics subsidiary.

For the first six months of this year, Ford earned $2.56 billion, or $2.15 a share, down 18% from $3.12 billion, or $2.89 a share, in the first half of 1995. Revenues totaled $74.2 billion, up 4% from $71.17 billion.