Solid U.S. sales offset overseas troubles

Hot U.S. sales of cars and trucks pushed profits at Ford Motor Co. to $2.1 billion in the first quarter, up 5 percent from a year ago and better than Wall Street expected.

Ford said Monday that increasing profits in the United States offset weakness in markets overseas.

“Our earnings momentum is as strong as ever,” said Jac Nasser, Ford’s president and chief executive. “We are transforming our car and truck business, and we have positioned the company for profitable growth in financial services, automotive consumer services, Hertz and e-business.”

The world’s No. 2 automaker said it earned $1.70 a share for this year’s first three months, compared with $2 billion, or $1.60 a share, for the same period last year. Last year’s earnings included a one-time gain of $165 million, or 14 cents a share, from the sale of Ford’s share of Portugal’s AutoEuropa.

“It was an extraordinarily strong quarter,” said analyst David Garrity of GVA Research Inc.

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The results topped analyst forecasts of $1.58 a share, as reported by First Call/Thomson Financial.

Ford stock rose 9 percent, or by $4.81 1/4, to $57.06 1/4 a share on the New York Stock Exchange.

Also likely to help Ford is a plan announced Friday to spin off its Visteon auto-parts unit. The automaker’s return on invested capital is likely to rise as a result of its decision, Garrity said.

In addition, Ford said last week that it will pay shareholders $20 in cash or additional stock for each share they own. It said it will cap the cash portion of the share program at $10 billion.

“Therefore, I would say, Ford’s certainly very attractive as an investment,” Garrity said. “We have a $75 price target.”

Revenue for the quarter totaled $42.9 billion, up 14 percent from $37.5 billion a year ago.

Minus Visteon and AutoEuropa, earnings in Ford’s automotive operations totaled $1.6 billion, up $271 million from last year. Revenue from auto operations was up 14 percent to a record $36 billion from $31.6 billion.

In North America, Ford — excluding Visteon — earned $1.7 billion, up $288 million from the first quarter of 1999.

Most of that was due to stronger sales of profitable vehicles. Ford’s car sales were up, thanks to models such as the Ford Focus, Ford Taurus/Mercury Sable and Lincoln LS.

Truck sales were down slightly,as the company ramped up production of new models. But Ford officials said sales for the rest of the year should be strong.

Ford’s marketing costs — including incentives and rebates — rose to 11 percent of revenue, up one-tenth of a percentage point. That’s in contrast to General Motors Corp., which said last week that higher rebates and incentives hurt earnings slightly.

In Europe, Ford lost $3 million, compared with a loss of $10 million last year. Losses in South America decreased to $82 million from $141 million last year.

All told, Ford lost $115 million in Europe, South America and other overseas markets, about even with the same period a year ago.

“Outside of North America, our car business still has a lot of room for improvement,” said Ford Chief Financial Officer Henry Wallace.

Visteon earned $147 million, down $58 million from a year ago, due to price reductions with Ford. Ford said the division had won $918 million in new contracts far this year, and that 35 percent was from customers other than Ford.

Ford Credit earned $353 million, up 18 percent or $53 million from a year ago. Ford’s Hertz rental-car unit earned $56 million, up 14 percent from $48 million a year ago.