Ford Profit Rises Amid Strong SUV Sales

Ford Motor Co. said Wednesday that its earnings rose 8% in the fourth quarter on higher sales of profitable sport-utility vehicles and luxury cars and smaller losses in Europe and South America.

The maker of the Explorer sport utility, F-series pickup, and Volvo and Jaguar luxury cars, said net income rose to $1.81 billion, or $1.47 a share, from profit from operations of $1.67 billion, or $1.35, in the year-earlier quarter. Revenue jumped 17% to $44.4 billion.

The earnings were in line with the $1.45-per-share average analyst estimate in a First Call/Thomson Financial poll but trailed the $1.54 estimate of EarningsWhispers.com.

Ford’s shares fell $2.13 to close at $48 on the New York Stock Exchange. Analysts said investors were worried about losses in Europe and disappointed that Ford did not announce plans to buy back stock.

“The risk is that the overseas problems will take time to fix while the profits in North America will come under increasing pricing competition” from rivals’ new products, Merrill Lynch Securities analyst John Casesa said.

“The North American truck business is a powerful but narrow base.”

The latest results included expenses of $103 million, or 8 cents a share, to cover the costs of lump sum payments negotiated in October in its four-year agreement with the United Auto Workers union. The year-ago results exclude a charge of $631 million, or 51 cents a share, to cut employees.

Ford benefited as U.S. consumers bought a record 16.96 million cars and light trucks last year.

Results improved in Europe and South America after Chief Executive Jac Nasser made management changes earlier in the year. Still, full-year performance declined in both regions from 1998.

The loss in Europe narrowed to $55 million from $74 million a year ago.

Nasser said last week that Ford plans to cut capacity in Europe and would make an announcement in a few weeks.

Losses in South America narrowed to $95 million from $151 million. Ford sold 117,000 vehicles in Brazil last year, a third less than in 1998, as higher interest rates damped demand.

Profit fell 26% to $95 million at Visteon Automotive Systems, the parts unit Ford plans to spin off or take public later this year.

Visteon did achieve its goal of winning $2 billion of new supply contracts in 1999. About 38% of that work will be for auto makers other than Ford.