Ford hoping to end string of losing quarters
Ford hoping to end string of losing quarters, break even in 2002
By GAIL KACHADOURIAN
Even as it announced an $800 million net loss for the first quarter, Ford Motor Co. said its second quarter should finish in the black, and Chairman Bill Ford said he expects the company to at least break even in 2002.
That helps the automaker move closer to its goal of producing $7 billion in pre-tax profit by 2005.
"While there is still a great deal of uncertainty in our industry, the general economic climate is improving and we are on schedule to meet or surpass our 2002 earnings milestone," Bill Ford said.
The automaker said it is working to reduce incentive costs and expects to post a second-quarter profit.
Thomson Financial/First Call's consensus estimate for second-quarter earnings is 14 cents per share. Bill Ford said it should exceed that estimate and end four straight losing quarters.
Additionally, Ford CFO Martin Inglis reiterated the break-even target for 2002 in a conference call, but said he was also comfortable with Wall Street's consensus estimate for full-year earnings of 11 cents per share.
The company's first-quarter loss included a one-time charge of $708 million and a one-time gain of $16 million. Both items relate to changes in accounting methods. Ford Motor's net income in the first quarter last year was $1.06 billion, including a $72 million one-time charge due to a change in accounting methods.
Excluding special items, Ford Motor's first-quarter loss was $108 million. High incentive costs were largely to blame, said company spokesman David Reuter. Those costs were 15.7 percent of Ford Motor's U.S. total sales of $21.2 billion. In the year-ago quarter, those costs were 12.2 percent of $22 billion in sales.
Excluding special items, global automotive operations in the first quarter lost $310 million on sales of $32.3 billion. That compares with the $748 million profit on sales of $34.7 billion earned a year ago.
Global sales for the quarter fell 7 percent to 1.7 million vehicles.
North American operations' loss of $430 million, excluding one-time charges, primarily was to blame for the global loss. In the first quarter last year, North America earned $754 million.
South American operations lost $51 million, compared with last year's first-quarter loss of $53 million, excluding special items.
But the European automotive business, which benefited from a change in accounting standards, had a 33 percent increase in earnings to $117 million. Had it not been for that accounting change, earnings would have been about the same as last year's $88 million, Reuter said.
Automotive operations outside North America, South America and Europe earned $54 million, compared with a $41 million loss in the first quarter of 2001. Gains at Mazda, which is 30 percent owned by Ford Motor, largely contributed to the gain.
The automaker also reported that Ford Credit's earnings dropped 40 percent to $242 million. The Hertz subsidiary lost $48 million.
Ford Motor estimates it will produce more than 4 million vehicles in North America this year, compared with 3.9 million in 2001. The company expects total North American industry sales to be about 16.5 million units.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....