Ford Sees Net Income Drop 19% in Quarter

Ford Motor Co. said its net income fell 19% in the second quarter from a year earlier, stung by lower production and intense competition in North America, where it lost more than $900 million.

The nation’s second-largest automaker said Tuesday that it earned $946 million, or 47 cents a share, in the quarter, down from $1.17 billion, or 57 cents, a year earlier. Excluding special items, Ford earned $936 million, or 47 cents, compared with $1.2 billion, or 61 cents, last year.

The Wall Street consensus, which excluded special items, was for earnings of 33 cents a share.

Once again, Ford’s finance arm carried the automaker, pumping more than $1 billion toward the bottom line.

Chief Financial Officer Don Leclair said Ford now expected to post a full-year loss on the automotive side of the business -- led by North America -- after providing earlier guidance of a profit of $1.5 billion to $2 billion.

“Despite profitability in most regions, our global automotive results were disappointing, reflecting the fiercely competitive environment in which we continue to operate, particularly in North America,” Chief Executive William Clay Ford Jr. said.

Ford said the company would respond in part by improving its cost structure and “making essential investments in the future.”

The company said last month that it would cut salaried positions at its North American operations by 5%, or about 1,700, and reduce the use of agency and purchased services by 10%. Those cuts come atop 1,000 salaried job cuts announced in April.

Still, the company maintained its full-year earnings guidance of $1 to $1.25 a share. That’s down from a forecast of $1.25 to $1.50 issued in April, when the company lowered its original guidance of $1.75 to $1.95.

Revenue in the second quarter rose to $44.5 billion from $42.9 billion a year earlier. Automotive sales rose to $38.7 billion from $36.7 billion last year.

Ford’s U.S. sales were off 3.8% for the first six months of 2005, according to Autodata Corp. Sluggish sales of trucks and sport utility vehicles accounted for a big part of the slump. Leclair said Ford’s sales improved somewhat in June, but General Motors Corp.’s highly touted employee pricing promotion took a big chuck of potential sales.

Ford -- as well as DaimlerChrysler’s Chrysler Group -- has responded with its own summer employee discount program for all customers and said, “July is shaping up to be a very strong sales month.”

Ford shares fell 9 cents Tuesday to $10.84.