Profit at Ford Jumps 82% in 3rd Quarter
Ford Motor Co. said Wednesday that its third-quarter profit jumped 82% as a strong performance in its U.S. automotive business and financial services offset a surprisingly large loss on cars and trucks overseas.
Profit from operations rose to $649 million, or 53 cents a share, up from net income of $357 million, or 27 cents, in the same quarter last year. The earnings barely topped analysts’ expectations of 51 cents a share.
After a one-time credit and charge, Ford had net income in the latest quarter of $686 million, or 56 cents a share.
Ford’s lending companies accounted for 98% of that profit, as automobile losses in Europe and Brazil reduced overall earnings on autos to just $15 million. That stole some of the glitter from a stellar U.S. performance fueled by brisk demand for the new Expedition sport-utility vehicle and F-150 pickup trucks.
Ford results followed much-better-than-expected third-quarter earnings from Chrysler Corp. and General Motors Corp.
Ford shares, which had risen Monday and Tuesday, fell 87.5 cents to close at $32.375 on the New York Stock Exchange.
Losses in Europe jumped to $472 million from $320 million a year ago, widening Ford’s total international loss on autos to $634 million from $187 million.
“We need to restructure, we need to reduce our costs” in Europe, said David McCammon, Ford’s vice president of finance.
McCammon said the company is doing a detailed study of costs in Europe. The company is also offering early-retirement packages to more than 2,000 people there and will take a charge for it in the fourth quarter.
Ford Chairman Alexander Trotman was in Europe on Wednesday, assessing the damage as part of a quarterly review. Last week, he named Jacques Nasser chairman of Ford Europe as well as president of worldwide automotive operations. Nasser, known as “Jac the Knife” at Ford, is an aggressive cost cutter.
Ford lost $226 million in South America. It was plagued by problems in Brazil, where the company is struggling to set up solo operations after the break-up of a partnership with Volkswagen.
In the U.S., Ford’s profit on cars, trucks and auto parts more than tripled to a third-quarter record of $634 million from $187 million a year earlier, when Ford was spending heavily to launch cars and trucks.
Ford’s third-quarter net income included a gain of $76 million, or 6 cents a share, for the sale of part of its USL Capital business and a charge of $39 million, or 3 cents a share, for an early-retirement program. Ford previously said it would take a charge of $300 million to $400 million in the second half for early retirements.
