Ford Cuts Forecast Again
Ford Motor Co. on Tuesday cut its 2005 earnings forecast for the second time this year and said it would eliminate about 1,700 additional jobs because of weak sales in North America.
Profit is expected to be $1 to $1.25 a share, excluding some costs, compared with a previous forecast of $1.25 to $1.50, the Dearborn, Mich.-based company said. On April 8, Ford lowered the forecast from a range of $1.75 to $1.95 a share.
Ford said it would trim 5% of salaried jobs in North America, in addition to a cut of 1,000 such positions in the U.S. announced in April. Chief Financial Officer Don Leclair said the latest reduction applied to about 35,000 employees at the Ford, Lincoln and Mercury brands.
The automaker’s U.S. sales fell 5.7% this year through May, compared with an industrywide decline of 1%. Ford’s first-quarter net income slid 38% and Standard & Poor’s in May lowered its rating on the company’s debt to junk status. The automaker has been hurt by market-share losses to Asian rivals including Toyota Motor Corp.
Ford also said Tuesday that it was eliminating 2005 bonuses for managers worldwide and was suspending matching grants for salaried-worker 401(k) retirement plans effective July 1. North American use of agency and purchased services will be cut 10%.
The automaker said “continued supplier-related challenges” contributed to the lower profit forecast, without giving details. Ford is taking over 24 plants of its former parts unit, Visteon Corp., to help the supplier cut costs.
Ford has been pressured “on the revenue side and the cost side” from rising raw-material prices, Leclair said.
Ford’s shares closed up 6 cents to $11.17. After the forecast announcement, its shares fell 41 cents, or 3.7%, to $10.76 in after-hours trading.
Ford spokesman Oscar Suris said he couldn’t estimate how much the company would save from the moves announced Tuesday. Ford matches 60 cents for every $1 employees contribute to 401(k) plans, up to 5% of their annual salary, he said.
The automaker raised its second-quarter profit forecast to 30 cents to 35 cents a share, excluding some costs, because of a reduced tax rate and better-than-expected results at Ford Motor Credit Co., which makes loans to buyers of Ford-produced cars and trucks. The previous second-quarter forecast was breakeven to 15 cents a share, excluding some costs.
The company was expected to earn $1.16 a share this year, the average estimate of 16 analysts surveyed by Thomson First Call. The second-quarter average estimate was 13 cents.
Net income for all of 2004 was $3.49 billion, or $1.73 a share. Net income in last year’s second quarter was $1.17 billion, or 57 cents.
