Ford Motor Profit Falls 27% on Declining Sales

Ford Motor Co. said Wednesday that profit in the second quarter fell 27% as North American sales of models including the Explorer sport utility vehicle and F-150 pickup declined.

The world’s No. 2 automaker said net income dropped to $417 million, or 22 cents a share, from $570 million, or 29 cents, in the 2002 period. Chief Executive William Clay Ford Jr. cut costs to post a second straight quarterly profit for the first time since he took over in late 2001. Revenue fell 3.6% to $40.7 billion.

Profit has fallen as Ford has lost market share to Japanese rivals such as Toyota Motor Corp. This has forced the American automaker to slash expenses by $1.3 billion in the quarter and $1.9 billion in the first half. The Dearborn, Mich., firm also pared its industry sales forecast for Europe after its pretax loss in the region grew to $525 million, Controller Don Leclair said.

Ford Motor’s financing unit produced almost all the profit, with just $3 million in pretax earnings coming from the making of cars and trucks worldwide.

Ford shares fell 65 cents to $10.99 on the New York Stock Exchange after the company said its loss in the third quarter would be 15 cents a share, wider than the 12-cent loss forecast from analysts polled by Thomson First Call.

The stock has dropped 12% in the last year, contrasted with a 5.2% gain for Toyota, the world’s third-biggest automaker. Shares of No. 1 General Motors Corp. have fallen 22% in that period.

Ford, GM and DaimlerChrysler’s Chrysler Group have relied for almost two years on rebates and low-interest loans to prop up North American sales.

Ford’s U.S. sales declined 2.3% in the first half of 2003, and its market share slipped to 21.2% from 21.3% a year earlier, according to Autodata Corp.

The company’s unit sales of cars and trucks in the U.S. were unchanged in June, adjusted for the number of sale days, while Toyota’s rose 11% and Nissan Motor Co.’s climbed 22%.

Ford projected that it would reduce costs by $2.5 billion in 2003 and reiterated that it expected to earn 70 cents a share this year.