Ford’s Loss Beats Analyst Estimates
Ford Motor Co. said Wednesday that it had a first-quarter operating loss of $108 million, or 6 cents a share, beating expectations thanks to a strengthening economy and improving auto market.
Analysts had expected Ford to lose 15 cents a share from operations. The operating loss contrasts with the $1.13 billion, or 60 cents, Ford earned before one-time items in the first quarter of 2001.
Factoring in special charges related to accounting changes, Ford’s net loss was $800 million, or 45 cents a share, down from a $1.06-billion net profit in the first three months of last year. First-quarter sales were $39.86 billion, down 6% from $42.45 billion the year before.
“These are pretty anemic results,” said Scott Hill, auto analyst with investment bank Sanford C. Bernstein. But the better-than-expected results are “an important and positive step off very low expectations,” he added.
It was the fourth straight quarter of red ink for the world’s No. 2 auto maker, which lost $5.4 billion last year and initiated a far-reaching restructuring plan in January.
But Ford, which has a number of new vehicles coming in the second half of 2002, says it will turn a moderate profit in the second quarter and will be in the black for the year.
“Our first-quarter performance shows that our revitalization plan efforts are taking hold and we are heading in the right direction,” Chief Executive Bill Ford said in a statement. “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.”
Ford will probably earn 8 cents to 9 cents per share above the Wall Street consensus of 14 cents for the second quarter, Chief Financial Officer Martin Inglis said. “We’re on track to reach all our milestones,” Inglis said in a conference call with security analysts and journalists.
Since the plan was announced in January--and paid for with a $4.1-billion charge in the fourth quarter of last year--Ford has eliminated a shift at a truck factory in New Jersey, raised $5 billion through a bond sale, eliminated 1,500 salaried jobs, decided to discontinue four car and truck models and announced three new vehicles.
Ford’s U.S. market share was down nearly two percentage points, to 20.7% from 22.6% this time last year, due largely to lower fleet sales and the changeover from the previous Expedition sport utility vehicle to the new model that begins shipping next month.
“The company no doubt cut costs feverishly and a return to proactive revenue management enabled marketing expenses to fall,” said John Casesa, automotive analyst with Merrill Lynch.
Ford’s vehicle production in the second half is likely to decline from the first half by about 20% for a 2002 total of about 4 million in North America, reflecting lower industry sales overall. But several high-margin Ford vehicles will hit the market in the second half of the year to boost revenue, Inglis said, including the Ford Expedition, Lincoln Navigator, Volvo XC90 and Land Rover Range Rover sport utility vehicles.
Ford shares closed Wednesday at $16.18, up 32 cents in trading on the New York Stock Exchange.
