Ford Motor’s Earnings Drop 49%
Ford Motor Co.’s first-quarter earnings fell 49% due to weaker U.S. sales, but the results beat Wall Street’s expectations.
The world’s second-largest auto maker said Thursday that it earned $1.06 billion, or 56 cents a share, in the first three months of the year, compared with $2.08 billion, or $1.70 a share, in the same period last year.
The latest results include an accounting change related to the treatment of derivatives. Excluding that change, Ford’s first-quarter earnings would be $1.13 billion, or 60 cents a share.
Analysts surveyed by First Call/Thomson Financial had expected 54 cents a share from Ford.
Ford shares closed down 41 cents to $30.30 in trading on the New York Stock Exchange.
The year-ago results include earnings from Visteon Corp., the parts unit Ford spun off last year. Excluding the Visteon results and adjusting for the impact of a share buyback, Ford would have earned $1.93 billion, or 90 cents a share.
Ford revenue for the quarter was $42.4 billion, down from $42.9 billion last year. Revenue from global automotive operations was $34.65 billion, down from $36.2 billion a year ago.
Burnham Securities analyst David Healy called Ford’s latest earnings “respectably profitable,” despite negative effects of Ford’s delayed launch of its latest Explorer sport-utility vehicle and of production cuts prompted by months of weaker U.S. auto sales.
“Given everything going on in the company and industry, this was a pretty good quarter for Ford,” Healy said. He expects Ford’s second-quarter earnings to be $1 a share, well above the consensus estimate.
Ford’s North American automotive earnings were $754 million, compared with $1.7 billion in the first quarter of 2000. Over the first three months of this year, Ford’s U.S. sales are down 12% from a year ago, including a 15% drop in sales of cars and a 10% dip in sales of light trucks.
Ford said its North American performance was hurt by delayed launches of new models of its high-profit Ford Explorer and Mercury Mountaineer sport-utility vehicles, among other things.
Ford had delayed the new Explorer’s launch for months as it labored to make the SUV defect-free in the wake of last summer’s Firestone tire recall. Federal safety officials have linked 174 U.S. deaths and more than 700 injuries to questioned Firestone tires, many once installed as original equipment on Explorers, for 11 years the nation’s top-selling SUV.
Now, “the launch of the Ford Explorer and Mercury Mountaineer is off to a good start and should provide great momentum to our North American business,” Jacques Nasser, Ford’s president and chief executive, said.
In Europe, Ford’s earnings of $88 million reversed a $3-million loss last year. In South America, the auto maker shaved its losses to $53 million, a $29-million improvement from a year ago. In other markets worldwide, Ford lost $41 million, compared with $30 million lost last year.
“The aggressive restructuring actions we took overseas are beginning to show improved results,” Nasser said.
U.S. sales by major domestic auto makers have slid for six consecutive months, prompting them to slow production to trim bloated inventories. Ford cut first-quarter North American production about 15% from the same period last year, with plans to pare output by 7% from this month through June.
