Ford Motor Company on Wednesday reported net income of $US896 million, or 45 cents a share, for the first quarter (Q1) of 2003, up 181% on Q1 2002’s net loss of $1.1 billion, or 61 cents a share.
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The First Call analysts’ consensus estimate was 22 cents a share for the first quarter.
Ford’s financial results reported separate figures for the Premier Automotive Group (PAG) for the first time and showed a before tax loss of $88 million compared with a $70 million loss a year ago.
Ford Motor income before taxes was $1.3 billion during Q1 2003, compared with a $27 million loss in Q1 2002.
Q1 revenue was $40.9 billion, up slightly from $39.5 billion during last year’s Q1. Worldwide vehicle unit sales in the 2003 Q1 were 1,726,000, up 3% from 1,675,000 a year ago.
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By GlobalData“Our Q1 performance demonstrates that the acceleration of our cost-cutting actions and the management team’s focus on improving our core business are making a difference,” said chairman and CEO Bill Ford.
“Our overall financial results continue to improve, our Q1 U.S. market share is up from last year, and we are gaining momentum on most other fronts.”
During Q1, Ford’s corporate US market share was 21.2%, up slightly from Q1 2002’s 20.7%.
Ford has recently changed the way it reports financial results and now separates out North American and international automotive operations.
The North America automotive segment includes Ford, Lincoln and Mercury in the US, Canada and Mexico, and the associated costs of design, development, manufacturing and servicing. The international automotive segment includes Ford vehicles outside North America and Premier Automotive Group model lines (Aston Martin, Jaguar, Land Rover and Volvo) throughout the world (including North America), together with associated costs.
Ford also now separates out results for the business units in the international automotive segment for Ford-brand Europe, Ford-brand South America, Ford-brand Asia Pacific as well as PAG.
These changes were made to reflect organisational changes resulting from the appointment of executive vice presidents to lead North American and international automotive operations.
AUTOMOTIVE SECTOR
Ford’s automotive sector earned $659 million pre-tax during Q1 2003, compared with a loss of $370 million a year ago.
Worldwide automotive revenue improved by $2 billion from $32.2 billion during Q1 2002 to $34.2 billion in Q1 2003.
Automotive cash, marketable securities and Voluntary Employee Beneficiary Association (VEBA) assets at March 31 rose to $26.6 billion, up from $25.3 billion at the end of 2002.
NORTH AMERICAN AUTOMOTIVE
North America automotive earned $1.2 billion pre-tax compared with a pre-tax profit of $465 million in Q1 2002. The improvement reflected strong cost performance, favourable mix and higher market share, offset partially by lower industry volume. North America automotive revenue in Q1 2003 rose to $22.2 billion, compared with $21.5 billion in Q1 2002.
INTERNATIONAL AUTOMOTIVE
The 2003 Q1 pre-tax loss for international automotive narrowed to $353 million, from a loss of $469 million during Q1 2002. First-quarter 2003 revenue for international automotive increased to $12.0 billion, compared with $10.4 billion during Q1 last year.
EUROPE
Ford-brand Europe incurred a pre-tax loss of $249 million in Q1 2003, compared with a pre-tax loss of $268 million during the same period a year ago. The improvement is explained by better cost performance, offset largely by lower net pricing. Ford-brand Europe’s revenue in the Q1 rose to $5.0 billion, compared with $4.1 billion during Q1 2002.
SOUTH AMERICA
The pre-tax loss for Ford-brand South America narrowed to $31 million during Q1, from a loss of $85 million during Q1 a year ago. The improvement reflected higher market share, continued cost reductions and higher net pricing, partially offset by lower industry volume.
Revenue in South America was $330 million in Q1, compared with $396 million in Q1 2002. The impact of a weaker Brazilian real more than offset improved unit volume, resulting in the decline in revenue.
ASIA-PACIFIC
During Q1 2003, Ford-brand Asia-Pacific incurred a pre-tax loss of $26 million, compared with a loss of $39 million in the 2002 Q1. The improvement reflected higher volume from the introduction of new products, primarily the all-new Falcon in Australia. Revenue improved to $1.3 billion, compared with $1.0 billion during Q1 2002.
PAG
Premier Automotive Group reported a pre-tax loss of $88 million in Q1 2003, compared with a pre-tax loss of $70 million during Q1 2002. The decline primarily reflected lower net pricing, as well as lower volume associated with the production ramp-up of the all-new Jaguar XJ, largely offset by improved mix resulting from the all-new XC90 at Volvo and Range Rover at Land Rover. First-quarter revenue for PAG rose to $5.4 billion, from $4.9 billion a year ago.
FORD CREDIT
Ford Motor Credit Company reported net income of $442 million in Q1 2003, up $186 million from earnings of $256 million in the same period a year ago. The increase primarily reflected a lower provision for credit losses and the net favourable impact of receivables sales, offset partially by the unfavourable impact of a lower level of managed receivables.
On a pre-tax basis, Ford Credit earned $727 million in Q1 2003, compared with $396 million in Q1 2002.
HERTZ
Hertz reported a pre-tax loss of $59 million in Q1 2003, the same as the pre-tax loss a year ago.
OUTLOOK
“The U.S. economy is certainly continuing to feel the effects of the geopolitical uncertainty we have faced over the last several months,” said Ford vice chairman and chief financial officer Allan Gilmour.
“Despite consumer confidence being down so significantly, Ford Motor Company has earned a profit in the automotive sector, improved revenue, accelerated cost reductions and generated positive operating cash flow, showing that we are staying clearly focused on our goals. Our task is to continue to deliver on our objectives throughout the remainder of 2003 and beyond.”
Ford expects to earn about 10 cents a share in Q2 2003, which would result in first-half 2003 earnings of about 55 cents a share.
