Ford Motor Company on Tuesday reported net income of US47 cents per share, or $946 million, for the second quarter of 2005, off from 57 cents per share, or $1.2 billion, in the second quarter of 2004.
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Second-quarter operating earnings, excluding special items, were 47 cents per share, or $936 million, compared to 61 cents per share, or $1.2 billion, a year ago.
Sales and revenue in the second quarter was $44.5 billion, compared to $42.9 billion.
“Despite profitability in most regions, our global automotive results were disappointing, reflecting the fiercely competitive environment in which we continue to operate, particularly in North America,” said chairman and chief executive officer Bill Ford.
“We are responding to this tougher operating environment through actions aimed at improving our cost structure, optimising our global footprint, strengthening our balance sheet and making essential investments for the future.”
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By GlobalDataDuring the second quarter Ford announced plans to further reduce salaried personnel and related costs in North America, consolidated manufacturing at Jaguar in the UK, including job cuts, and agreed a memorandum of understanding with Visteon which will allow it to diversify its supply base and enhance its access to parts, systems and technologies that are more competitive.
Ford is also considering options for Hertz, its rental car and equipment unit, including a potential partial initial public offering or a sale to a third party.
On a pre-tax basis, worldwide automotive losses in the second quarter were $245 million, down $342 million from a $97 million profit during the same period a year ago.
Worldwide automotive sales for the second quarter rose to $38.7 billion from $36.7 billion. Worldwide vehicle-unit sales in the quarter were 1,718,000, down from 1,751,000.
THE AMERICAS
For the second quarter, the Americas reported a pre-tax loss of $819 million, down $1.3 billion from a $476 million pre-tax profit.
North American automotive operations reported a pre-tax loss of $907 million, down $1.4 billion from a $454 million pre-tax profit. Higher costs and lower volumes contributed to the decline. Sales were $19.9 billion, down $568 million.
South American automotive operations reported a second-quarter pre-tax profit of $88 million, an increase of $66 million from a $22 million pre-tax profit. The improvement primarily reflected higher volumes and pricing, partially offset by higher commodity costs. Sales for the second quarter improved to $1 billion from $665 million.
FORD EUROPE AND PREMIER AUTOMOTIVE GROUP
The 2005 second-quarter combined pre-tax profit for Ford Europe and PAG automotive operations was $83 million, compared with a loss of $136 million a year ago, an improvement of $219 million.
Europe’s second-quarter pre-tax profit was $66 million, compared with a pre-tax profit of $211 million. The deterioration of $145 million primarily reflected lower net pricing, lower production volumes, higher material and pension costs and lower profits from operations in Turkey. These were partially offset by internal cost reductions and mix improvements. Sales in the second quarter were $7.9 billion, compared with $6.7 billion.
PAG reported a pre-tax profit of $17 million for the second quarter, compared with a pre-tax loss of $347 million. The improvement primarily reflected richer product mix and higher net revenue, primarily at Land Rover, partially offset by unfavourable exchange. Second-quarter sales for PAG were $7.9 billion, compared with $6.9 billion.
FORD ASIA-PACIFIC and AFRICA/MAZDA
The 2005 second-quarter combined pre-tax profit for Ford Asia-Pacific and Africa/Mazda was $93 million, compared with $55 million a year ago, an improvement of $38 million.
Ford Asia-Pacific and Africa reported a pre-tax profit of $36 million, an improvement of $41 million from a $5 million pre-tax loss a year ago. The results primarily reflected favourable exchange, higher volumes and improved mix, partially offset by higher developments costs for future products. Sales were $2 billion, an improvement of $100 million from $1.9 billion.
Ford’s share of Mazda profits and associated operations was $57 million, down from $60 million.
OTHER AUTOMOTIVE
Second-quarter earnings included a profit of $398 million in other automotive financial results. This is an improvement of $696 million, primarily reflecting interest income related to tax refunds.
FORD MOTOR CREDIT COMPANY
On a pre-tax basis, Ford Motor Credit earned $1.2 billion in the second quarter, down $229 million from the previous year. The decline primarily reflected higher borrowing costs and the impact of lower receivable levels, partially offset by improved credit loss performance. FMC reported net income of $740 million, down from $897 million.
HERTZ
Hertz reported a second-quarter pre-tax profit of $153 million, a $9 million improvement from the $144 million pre-tax profit in 2004. The improvement reflected higher car and equipment rental volumes and higher proceeds from the disposal of used vehicles and equipment, partially offset by a highly competitive pricing environment in car rental markets. Net income in the second quarter for Hertz was $97 million, up from $94 million.
SPECIAL ITEMS
In total, special items had no impact on earnings per share in the second quarter. Charges for Visteon-related actions and personnel reduction programs reduced earnings per share by 18 cents. These charges were fully offset by non-recurring adjustments that, in total, significantly reduced the company’s tax accrual during the quarter.
OUTLOOK
Executive vice president and chief financial officer, Don Leclair, said: “We recognise we have more to do in an environment that continues to be extremely challenging. We will continue to focus on improving our operating efficiencies and margins.”
Ford’s 2005 full-year earnings guidance is unchanged at $1.00 to $1.25 per share.
