Ford Motor Company [NYSE: F] today reported net income of $896 million, or 45 cents a share, for the first quarter of 2003.
This compares with a net loss of $1.1 billion, or 61 cents a share, in the first quarter of 2002. The loss from continuing operations in the first quarter of 2002 was $80 million, or 5 cents a share.
Ford Motor Company's income before taxes was $1.3 billion during the first quarter of 2003, compared with a $27 million loss in the first quarter of 2002.
Ford's first quarter revenue rose to $40.9 billion, from $39.5 billion during last year's first quarter. Worldwide vehicle unit sales in the 2003 first quarter were 1,726,000, up 3 percent from 1,675,000 a year ago.
"Our first quarter performance demonstrates that the acceleration of our cost-cutting actions and the management team's focus on improving our core business are making a difference," said Bill Ford, chairman and CEO. "Our overall financial results continue to improve, our first quarter U.S. market share is up from last year, and we are gaining momentum on most other fronts. In addition, we launched the new Jaguar XJ and are in the process of launching several other exciting new products, such as the all-new Ford Focus C-MAX in Europe and the highly anticipated Ford F-150 pickup truck in the U.S."
During the first quarter, Ford's corporate U.S. market share was 21.2 percent. Ford's corporate U.S. market share has improved since the first quarter of 2002, when it was 20.7 percent.
New Segment Reporting
As disclosed in the company's 2002 10-K report, beginning with the 2003 first quarter, Ford is expanding the number of operating segments by reporting two segments within its Automotive sector - North America and International.
The North America Automotive segment includes the sale of Ford, Lincoln and Mercury cars and trucks in the U.S., Canada and Mexico, and the associated costs to design, develop, manufacture and service these vehicles. The International Automotive segment includes the sale of Ford brand vehicles outside of North America and the sale of Premier Automotive Group brand vehicles (i.e., Aston Martin, Jaguar, Land Rover and Volvo) throughout the world (including North America), together with the associated costs to design, develop, manufacture and service these vehicles. Ford is providing separate results for the business units within the International Automotive segment (i.e., Ford-brand Europe, Ford-brand South America, Ford-brand Asia Pacific and the Premier Automotive Group).
Previously, the company reported Automotive financial results on a geographic/legal entity basis. The new segment reporting will be on a business-unit basis consistent with the way these two segments are managed. Costs for each segment and business unit within each segment will reflect absolute corporate costs, eliminating the effect of transfer prices for vehicles, components and product development that were previously reflected in geographic results. Net interest expense and results of other non-core Automotive businesses will be reported centrally; these were previously included in geographic results.
These changes are being made to reflect organizational changes resulting from the appointment of executive vice presidents to lead North American and International Automotive Operations.
On a pre-tax basis, Ford's automotive sector earned $659 million during the first quarter of 2003, compared with a loss of $370 million a year ago.
Worldwide automotive revenue improved by $2 billion from $32.2 billion during the first quarter of 2002 to $34.2 billion in the first quarter of 2003.
Automotive cash, marketable securities and Voluntary Employee Beneficiary Association (VEBA) assets at March 31 rose to $26.6 billion, up from $25.3 billion at the end of 2002, more than accounted for by positive operating cash flow and the effect of tax refunds.
NORTH AMERICA AUTOMOTIVE
North America Automotive earned $1.2 billion on a pre-tax basis, compared with a pre-tax profit of $465 million in the first quarter of 2002. The improvement reflected strong cost performance, favorable mix and higher market share, offset partially by lower industry volume.
North America Automotive revenue in the first quarter of 2003 rose to $22.2 billion, compared with $21.5 billion in the first quarter of 2002.
The 2003 first-quarter pre-tax loss for International Automotive narrowed to $353 million, from a loss of $469 million during the first quarter of 2002.
First-quarter 2003 revenue for International Automotive increased to $12.0 billion, compared with $10.4 billion during the first quarter last year.
Ford-brand Europe: Ford-brand Europe incurred a pre-tax loss of $249 million in the first quarter of 2003, compared with a pre-tax loss of $268 million during the same period a year ago. The improvement is explained by better cost performance, offset largely by lower net pricing. Ford-brand Europe's revenue in the first quarter rose to $5.0 billion, compared with $4.1 billion during the first quarter of 2002.
Ford-brand South America: The pre-tax loss for Ford-brand South America narrowed to $31 million during the first quarter, from a loss of $85 million during the first quarter a year ago. The improvement reflected higher market share, continued cost reductions and higher net pricing, partially offset by lower industry volume. Revenue in South America was $330 million in the first quarter, compared with $396 million in the first quarter of 2002. The impact of a weaker Brazilian Real more than offset improved unit volume, resulting in the decline in revenue.
Ford-brand Asia-Pacific: During the first quarter of 2003, Ford-brand Asia-Pacific incurred a pre-tax loss of $26 million, compared with a loss of $39 million in the 2002 first quarter. The improvement reflected higher volume from the introduction of new products, primarily the all-new Falcon in Australia. Revenue improved to $1.3 billion, compared with $1.0 billion during the first quarter of 2002.
Premier Automotive Group (PAG): PAG reported a pre-tax loss of $88 million in the first quarter of 2003, compared with a pre-tax loss of $70 million during the first quarter of 2002. The decline primarily reflected lower net pricing, as well as lower volume associated with the production ramp-up of the all-new Jaguar XJ, largely offset by improved mix resulting from the all-new XC90 at Volvo and Range Rover at Land Rover. First-quarter revenue for PAG rose to $5.4 billion, from $4.9 billion a year ago.
Ford Motor Credit Company reported net income of $442 million in the first quarter of 2003, up $186 million from earnings of $256 million in the same period a year ago. The increase primarily reflected a lower provision for credit losses and the net favorable impact of receivables sales, offset partially by the unfavorable impact of a lower level of managed receivables.
On a pre-tax basis, Ford Credit earned $727 million in the first quarter, compared with $396 million in the first quarter of 2002.
Hertz reported a pre-tax loss of $59 million in the first quarter, the same as the pre-tax loss a year ago.
"The U.S. economy is certainly continuing to feel the effects of the geopolitical uncertainty we have faced over the last several months," said Allan Gilmour, vice chairman and chief financial officer. "Despite consumer confidence being down so significantly, Ford Motor Company has earned a profit in the automotive sector, improved revenue, accelerated cost reductions and generated positive operating cash flow, showing that we are staying clearly focused on our goals. Our task is to continue to deliver on our objectives throughout the remainder of 2003 and beyond."
Ford expects to earn about 10 cents a share in the second quarter of 2003, which would result in first-half 2003 earnings of about 55 cents a share.
Investors and media can hear a review of first quarter results by Allan Gilmour, vice chairman and chief financial officer, via conference call at 703-871-3025 or on the Internet at http://www.shareholder.ford.com.
Supporting presentation material will be available at the same Internet address. The presentation will begin at 8:30 a.m. EDT, April 16. The company will also conduct a conference call at 1:00 p.m. EDT, April 16, with Don Leclair, vice president and controller to address additional questions about the company's segment reporting changes. The call can be accessed by dialing 703-871-3025. A listen-only web cast will also be available on the Internet at www.shareholder.ford.com.
Ford Motor Company, headquartered in Dearborn, Michigan, is the world's second largest automaker, with approximately 335,000 employees in 200 markets on six continents. Its automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Credit, Quality Care and Hertz. Ford Motor Company will observe its 100th anniversary on June 16, 2003.