Ford Motor Company has today reported a net profit of $570 million, or 29 cents per share, in the second quarter of 2002. The profit breaks a run of four consecutive quarterly losses. However, any euphoria over black ink was decidedly limited, with analysts noting that a loss in the third quarter is likely as production turns down and the costs of marketing rise.
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“The second quarter was an important leg on Ford Motor Company’s journey to financial health, but we still have much work to do,” said Bill Ford, chairman and CEO.
“The successful introduction of the Expedition and Navigator, improved J.D. Power quality ratings, continued improvements at Ford Credit and in Europe, as well as further progress on our Revitalization Plan highlighted the accomplishments of the entire Ford team.”
“We made progress against several of our Revitalization Plan milestones, including a significant improvement in the J.D. Power quality study, but we are not satisfied with our results,” said Nick Scheele, Ford president and chief operating officer. “Quality is our top priority and we expect further improvements going forward.”
Ford said it has further rationalised its manufacturing capacity, remaining on track to increase capacity utilisation by 10 percentage points by year’s end. Shifts have been eliminated at the Edison and Ohio assembly plants, with an additional shift elimination scheduled at the Wixom Assembly plant at the end of the summer. The company also revealed that it has realised more than $400 million in cash from the divestment of non-core operations during the first six months of the year.
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By GlobalDataFord’s second quarter revenues were $42.3 billion, equal to last year’s second quarter. Worldwide vehicle unit sales in the 2002 second quarter were 1,854,000, approximately equal to the previous year’s quarter.
Worldwide automotive operations earned $205 million in the second quarter, compared with a loss of $1 billion a year ago. Worldwide automotive revenues were $35.2 billion, compared with $34.6 billion a year ago.
Strong production in North America contributed to a $45 million profit in North America in the second quarter. This compared with a loss of $1.1 billion in the 2001 second quarter, which included costs associated with the customer safety initiative to replace Firestone tyres.
In Europe, Ford says it earned $155 million and increased market share in the second quarter, compared with earnings of $141 million a year ago. Overall volumes were down due to a lower industry and the changeover to the all-new Fiesta.
Ford operations in South America lost $96 million, compared with a loss of $70 million a year ago. The company said that South America continues to represent a difficult business environment due to lower industry volume and currency weakness.
Operations from the rest of the world earned a profit of $101 million, compared with a profit of $47 million in the 2001 second quarter. The biggest improvement was at Mazda.
Ford expects that for the full year, it will make a profit. “We continue to expect a modest profit for the full year, but those results are still unacceptable,” said Allan Gilmour, Ford vice chairman and chief financial officer. “We are continually monitoring our progress on the Revitalization Plan and are intensifying our efforts to reduce costs and improve efficiency to ensure that we stay on track.”
