Ford Shares Rally as Automaker Swings to Profit
Ford Motor posted an unexpected quarterly profit Thursday, led by strong results in Europe and South America and a narrowing loss in North America, sending its shares up 5 percent in pre-market trade.
The automaker also cut its second quarter North American production plan and said it would offer more targeted buyouts to union workers at specific plants after getting about 4,200 workers to accept recent offers to leave the company.
Ford expects the rest of 2008 to be challenging, cutting its full-year North American outlook for sales, but said it remains committed to its goal of returning North America and its whole auto business to profitability in 2009.
Ford reported net income of $100 million, or 5 cents per share, compared with a net loss of $282 million, or 15 cents per share, a year earlier. Revenue fell 8 percent to $39.4 billion, which excludes the Jaguar Land Rover unit it is selling to Tata Motors.
Ford reported a profit from continuing operations of $525 million, or 20 cents per share, excluding special items.
Excluding one-time items, analysts on average expected Ford to report a loss of 14 cents per share, according to Reuters Estimates. It was not immediately clear whether the estimate was comparable to Ford's operating earnings.
Like other U.S. automakers, Ford has been struggling with market share losses and a dramatic shift in consumer demand away from large sport utility vehicles to cars and smaller crossover SUVs built on passenger car platforms.
Ford was surpassed by Japanese rival Toyota Motor as No. 2 in auto sales in the United States last year.
Ford has offered buyouts to its 54,000 United Auto Workers-represented employees. It said 4,200 workers accepted buyouts in the latest round and said that it would offer more buyouts targeted to specific plants. It did not give a target for the earlier buyout plan or for the new targeted buyouts.
Ford, which posted losses of $2.7 billion in 2007 and $12.6 billion in 2006, has been cutting production capacity to match declining market share and meet the shift in demand for smaller more fuel-efficient vehicles.
The slowing U.S. economy and rising gasoline prices have pressured U.S. auto sales in 2008, including Toyota's, driving that shift.
With truck-heavy vehicle lineups, GM , Ford and Chrysler are feeling the pinch, while Toyota and Honda Motor expand market share.
Ford cut its North American production outlook for the second quarter by 20,000 vehicles to 710,000, or about 101,000 lower than a year earlier.
It has also said that it remains ready to cut production more if demand falls further.
Ford also cut its full year forecast for U.S. auto industry sales that includes medium and heavy trucks to a range of 15.3 million to 15.6 million, from a prior expectation for 16 million, a move executives tipped during a monthly sales conference call in early April.
Given that sales ran at about a 15.6 million seasonally adjusted annual rate in the first quarter, Ford is not banking on a significant sales rebound the rest of 2008. Medium and heavy duty trucks account for about 300,000 in annual sales.
That would make Ford's outlook roughly 15 million to 15.3 million for light vehicle sales in line with recent expectations from analysts and other automakers.
J.D. Power and Associates has cut its 2008 U.S. light vehicle sales forecast to 14.95 million vehicles, which would be the lowest since 1994.
JP Morgan cut its 2008 U.S. forecast to 15.2 million vehicles, from 15.5 million, and said Wednesday that U.S. auto industry sales ran at about a 15 million vehicle rate in April, down from the 15.1 million to 15.3 million rate in the first three months of the year.
In early April, Toyota's U.S. sales chief said U.S. industry sales would fall short of the automaker's initial forecasts for 16 million units and it would probably have to cut the outlook to the mid-15-million range.
GM said Wednesday that second-quarter U.S. auto industry sales may be weaker than the first quarter as fuel prices rise. It still expects a recovery in the second half of 2008.
Crude oil, which accounts for about 70 percent of the cost for making gasoline, hit nearly $120 a barrel Tuesday and the average price U.S. drivers paid for gasoline has soared to above $3.50 a gallon.
Ford also said its Ford Motor Credit reported net income of $24 million in the first quarter, down from $193 million a year earlier, mainly reflecting a higher provision for credit losses, depreciation on leased vehicles and higher net losses related to market valuation adjustments from derivatives.
Ford shares rose 5.1 percent to $7.90 in premarket trading and through Wednesday's close on the New York Stock Exchange had been up 47 percent since a March 17 trough.