Ford Turns In $1.2 Billion Profit
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Ford Turns In $1.2 Billion Profit
Ford Motor Co. more than doubled its income in the second quarter despite a drop in sales and market share and a sharp loss by the Premier Automotive Group.
Bill Ford, chairman and chief executive officer, said Tuesday he was pleased with the progress the company was making on its comeback plan in what has been an extremely competitive environment. "Although the remainder of the year includes many challenges, we'll generate lots of excitement with the introduction of new products such as the Ford Five Hundred, Freestyle, and Escape Hybrid, the Land Rover Discovery/LR3 and the new Ford Focus in Europe," Ford said. However, the heavy schedule of launches in the third quarter will reduce the automaker's earning power during the third quarter, Ford officials noted.
Ford said its net income in the second quarter climbed to 57 cents per share or $1.2 billion, compared to the $417 million or 22 cents per share earned during the second quarter of 2003. In addition, combined revenue from its automotive and finance sectors increased 5.5 percent to $42.8 billion.
Autos still down
Going behind the numbers, however, Ford's worldwide automotive sector lost $57 million in the quarter. Excluding the $140 million in charges, global automotive profits were $83 million, an $80 million improvement over last year. The special charges included a $120 million write-off of part of Ford's investment in Ballard Power Systems, a Canadian company that has been attempting to develop fuel cells.
In North America, the automotive pretax profit was $455 million excluding special items, up $10 million from a year ago.
Long-troubled Ford of Europe also posted a pre-tax profit of $211 million compared with the loss of $525 million in the same period a year ago. The $700 million swing was offset by an unexpected $362 million loss by Ford's Premier Automotive Group.
PAG, which operates worldwide, had posted a profit of $166 million during the same period in 2003. Ford officials blamed the unanticipated flow of red ink at PAG on unfavorable exchange rates, higher costs including the effects of product changeovers, and unfavorable mix that led to a drop in net pricing on every vehicle it sold. Jaguar, a perennial trouble spot for Ford, is a mess right now, Don Leclair, Ford chief financial officer acknowledged.
The giant automaker's South American unit also reported a pre-tax profit of $22 million, which represented a $91 million improvement from the loss posted in the same quarter a year ago.
The 2004 second-quarter combined pre-tax profit for Ford Asia-Pacific, Africa as well as Mazda and other operations was $55 million, compared with $17 million for the year-ago period, a year-over-year improvement of $38 million.
Credit rating good
The key to Ford's strong performance in the second quarter was Ford Motor Credit Company. Ford Credit reported record net income of $897 million in the second quarter of 2004, or more than double the $401 million the unit earned in the same quarter a year earlier. On a pre-tax basis from continuing operations, Ford Credit earned $1.4 billion in the second quarter, compared with $661 million in the previous year.
A decline in credit losses, higher used vehicle prices and the favorable impact of the low interest rate environment and the strong economic recovery all helped boost Ford Credit earnings.
In a research note, Merrill Lynch analyst John Casesa acknowledged Ford's better-than-expected second-quarter results, "but the overwhelming concentration of earnings in financial services will likely give investors reason for pause, given the prospect of rising interest rates and after the company posted several quarters of improvement in its auto business."
With two strong quarters already in the books, Ford has now raised its full-year earnings forecast by 15 cents per share to a range of $1.80 or $1.90 per share, excluding special items, Leclair said. "When you look at our second-quarter results you see continued strong performance in Financial Services and significant progress at Ford Europe, where actions we took last year have begun to pay off," noted Leclair "Looking forward, we remain dedicated to achieving our financial milestones in this competitive marketplace and continuing to improve our balance sheet."
Bill Ford, chairman and chief executive officer, said Tuesday he was pleased with the progress the company was making on its comeback plan in what has been an extremely competitive environment. "Although the remainder of the year includes many challenges, we'll generate lots of excitement with the introduction of new products such as the Ford Five Hundred, Freestyle, and Escape Hybrid, the Land Rover Discovery/LR3 and the new Ford Focus in Europe," Ford said. However, the heavy schedule of launches in the third quarter will reduce the automaker's earning power during the third quarter, Ford officials noted.
Ford said its net income in the second quarter climbed to 57 cents per share or $1.2 billion, compared to the $417 million or 22 cents per share earned during the second quarter of 2003. In addition, combined revenue from its automotive and finance sectors increased 5.5 percent to $42.8 billion.
Autos still down
Going behind the numbers, however, Ford's worldwide automotive sector lost $57 million in the quarter. Excluding the $140 million in charges, global automotive profits were $83 million, an $80 million improvement over last year. The special charges included a $120 million write-off of part of Ford's investment in Ballard Power Systems, a Canadian company that has been attempting to develop fuel cells.
In North America, the automotive pretax profit was $455 million excluding special items, up $10 million from a year ago.
Long-troubled Ford of Europe also posted a pre-tax profit of $211 million compared with the loss of $525 million in the same period a year ago. The $700 million swing was offset by an unexpected $362 million loss by Ford's Premier Automotive Group.
PAG, which operates worldwide, had posted a profit of $166 million during the same period in 2003. Ford officials blamed the unanticipated flow of red ink at PAG on unfavorable exchange rates, higher costs including the effects of product changeovers, and unfavorable mix that led to a drop in net pricing on every vehicle it sold. Jaguar, a perennial trouble spot for Ford, is a mess right now, Don Leclair, Ford chief financial officer acknowledged.
The giant automaker's South American unit also reported a pre-tax profit of $22 million, which represented a $91 million improvement from the loss posted in the same quarter a year ago.
The 2004 second-quarter combined pre-tax profit for Ford Asia-Pacific, Africa as well as Mazda and other operations was $55 million, compared with $17 million for the year-ago period, a year-over-year improvement of $38 million.
Credit rating good
The key to Ford's strong performance in the second quarter was Ford Motor Credit Company. Ford Credit reported record net income of $897 million in the second quarter of 2004, or more than double the $401 million the unit earned in the same quarter a year earlier. On a pre-tax basis from continuing operations, Ford Credit earned $1.4 billion in the second quarter, compared with $661 million in the previous year.
A decline in credit losses, higher used vehicle prices and the favorable impact of the low interest rate environment and the strong economic recovery all helped boost Ford Credit earnings.
In a research note, Merrill Lynch analyst John Casesa acknowledged Ford's better-than-expected second-quarter results, "but the overwhelming concentration of earnings in financial services will likely give investors reason for pause, given the prospect of rising interest rates and after the company posted several quarters of improvement in its auto business."
With two strong quarters already in the books, Ford has now raised its full-year earnings forecast by 15 cents per share to a range of $1.80 or $1.90 per share, excluding special items, Leclair said. "When you look at our second-quarter results you see continued strong performance in Financial Services and significant progress at Ford Europe, where actions we took last year have begun to pay off," noted Leclair "Looking forward, we remain dedicated to achieving our financial milestones in this competitive marketplace and continuing to improve our balance sheet."
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Re: Ford Turns In $1.2 Billion Profit
Originally Posted by Z28x
Must be that economy of scale that edged Ford out 
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Re: Ford Turns In $1.2 Billion Profit
Originally Posted by Z28x
.
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Re: Ford Turns In $1.2 Billion Profit
If you look under the surface, both GM and Ford made this profit largely off their financial arms, not the auto side of the business. The continuous erosion of their market share reflects that. 
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Re: Ford Turns In $1.2 Billion Profit
GM Automotive Operations made $529 million (a two fold increase over the year before)....Ford lost $57 million, or made $83 million depending on your accounting. GM's business structure is to make little profit on cars, and have a strong financing arm. They have kept several plants with under performing product running, despite the fact they should be closed. This has happened with the Blazer, Astro, and so forth. GM's stance is that it is better to pay people to make cars you sell at nearly no profit, then to pay them to make none at all (which they basically do with a plant closure under the current UAW CBA). This has a drag on their profits from NA operations. What we are seeing now, is that GM is replacing product that lost money (cavalier, Tracker), with product that has much greater margins, and stand a chance of breaking even (Aveo, Cobalt, and Equinox). Also the Equinox is selling like wildfire with next to no rebate...GM is hoping this happens with the Cobalt, and other new product.
Ford the brand is doing good, and will get better with the Mustang, and other new cars. European operations (PAG), and I am gonna guess Mercury are all loosing money and cancelling any ground Ford (the brand) gains. Looks like Nasser's buying binge back in the day was not so bright.
Ford the brand is doing good, and will get better with the Mustang, and other new cars. European operations (PAG), and I am gonna guess Mercury are all loosing money and cancelling any ground Ford (the brand) gains. Looks like Nasser's buying binge back in the day was not so bright.
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Re: Ford Turns In $1.2 Billion Profit
Don't forget, Ford made 1.95 Billion the quarter before and look to continue making profit for the rest of the year. Nasser really did a job on Ford and it shows. With the new cars coming out of Ford, I think they'll gain whatever ground they lost and not have to rely on the finance side of operations.
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From: The Golden State
Re: Ford Turns In $1.2 Billion Profit
Originally Posted by formula79
GM's stance is that it is better to pay people to make cars you sell at nearly no profit, then to pay them to make none at all (which they basically do with a plant closure under the current UAW CBA)...
However, it's still facinating to see a company like GM (roughly 2 1/2 times the size of the Ford Motor Company) earning the same profit yet has something like a minimum of 3 times the employees.
That's alot of labor, management, resources, medical, and retirement benefits GM has to hack through.
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From: Jersey Shore
Re: Ford Turns In $1.2 Billion Profit
Originally Posted by Aeromaks
But keep this in mind.....
GM is a much bigger company than ford...but just manages to outedge ford? lol. go figure.
GM is a much bigger company than ford...but just manages to outedge ford? lol. go figure.
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