Ford Motor Co. said Monday that it would record $2.2 billion in fourth-quarter pretax costs, mostly for a revised agreement on its 2000 spinoff of parts maker Visteon Corp.
The agreement helps Ford by stabilizing Visteon as the automaker rolls out new models, analysts said.
Ford shares rose 10%, the best one-day gain since April, after it also increased its 2003 forecast for profit, excluding some expenses, to as much as $1.10 a share from as much as $1.05. Ford credited lower costs, revenue from the redesigned F-150 pickup truck and gains from its Ford Motor Credit financial unit.
The Visteon accord is “good news for Ford in that they won’t have any interruptions in the flow of product from their largest supplier,” said Richard Hilgert, an automotive analyst for Oppenheimer & Co. in Detroit. “This is good news for Visteon in that it makes sure they’re going to be around for a while.”
Ford’s costs this quarter include $1.6 billion for the revised agreement, under which it assumes about that amount of Visteon’s $3 billion in prepayments on retiree health and insurance benefits for about 20,000 workers assigned to Visteon in the spinoff. Ford said the accord, which also gives it price cuts, was needed to assure Visteon’s financial health.
Ford also expects costs this quarter of about $450 million for previously disclosed job cuts in Europe and $150 million to dispose of unspecified non-core businesses it plans to sell. Total costs will be 72 cents a share, 52 cents of that for the Visteon accord, Ford said.
The automaker’s shares rose $1.55 to $16.79 on the New York Stock Exchange. Visteon gained 34 cents to $10.34. Both companies are based in Dearborn, Mich.
Ford’s costs will wipe out much of its net income for this year.
Ford said Monday that it expected full-year net income of 18 cents to 23 cents a share, its first such earnings in three years. Net income through three quarters was $1.3 billion, or 68 cents.