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Ford Announces Second Quarter Financial Results
DEARBORN, Mich. - Ford reported net income of 57 cents per share, or $1.2 billion, for the second quarter of 2004. This compares with net income of 22 cents per share, or $417 million, in the second quarter of 2003. |
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Ford's second-quarter earnings from continuing operations, excluding special items, were 61 cents per share, or $1.3 billion. This result exceeds the First Call consensus estimate of 50 cents per share.
Ford's total sales and revenue in the second quarter rose to $42.8 billion from $40.6 billion in the year-ago period.
"I am pleased that we continue to make solid progress in this extremely competitive environment," said Bill Ford, chairman and chief executive officer. "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."
Additional product introductions for the rest of the year include Ford F-Series Super Duty, GT and Mustang as well as Mercury Mariner and Montego.
AUTOMOTIVE SECTOR
On a pre-tax basis, Ford's worldwide automotive sector reported a loss of $57 million during the second quarter of 2004. Excluding special items of $140 million, worldwide automotive profit in the second quarter was $83 million, an $80 million improvement over the same period a year ago. The special items included a $120 million charge in North America related to the restructuring and revaluation of our investment in Ballard Power Systems, a leading fuel cell manufacturer, and $20 million for the completion of restructuring in Ford Europe.
Worldwide automotive sales for the second quarter rose to $36.7 billion from $34.1 billion in the same period last year. Worldwide vehicle-unit sales in the quarter were 1,748,000, up from 1,718,000 a year ago.
Automotive cash, marketable securities, loaned securities and short-term Voluntary Employee Beneficiary Association (VEBA) assets on June 30, 2004 were $26.8 billion, up from $26.5 billion at the end of the first quarter.
THE AMERICAS
For the second quarter, the Americas reported a pre-tax profit of $477 million, excluding special items, up $101 million from the same period a year ago.
North America: Ford's North America automotive pre-tax profit for the second quarter was $455 million, excluding special items, up $10 million from a year ago. The increase primarily reflected improved vehicle mix and favorable net pricing, partially offset by lower volumes and the non-recurrence of favorable 2003 warranty reserve adjustments. Sales were $20.5 billion, down from $20.7 billion in the same period a year ago.
South America: Ford's South America operations reported a second-quarter pre-tax profit of $22 million, a $91 million improvement from the 2003 second quarter. The improvement primarily reflected favorable pricing and higher vehicle volumes, partially offset by higher material costs. Sales improved to $665 million from $435 million in the same period a year ago.
FORD EUROPE AND PREMIER AUTOMOTIVE GROUP (PAG)
The 2004 second-quarter combined pre-tax loss for Ford Europe and PAG was $151 million, excluding special items, compared with a loss of $359 million for the year-ago period, a year-over-year improvement of $208 million.
Ford Europe: Ford Europe's second-quarter pre-tax profit was $211 million, excluding special items, compared with a pre-tax loss of $525 million during the 2003 period. The improvement of more than $700 million primarily reflected higher volumes and lower costs. Ford Europe's sales in the second quarter were $6.7 billion, compared with $5.2 billion during the second quarter of 2003.
Premier Automotive Group: PAG reported a pre-tax loss of $362 million for the second quarter, compared with a pre-tax profit of $166 million for the second quarter of 2003. The decline in results primarily reflected unfavorable exchange rates, higher costs including the effects of product changeovers, unfavorable mix and lower net pricing. Second-quarter sales for PAG were $6.9 billion, compared with $6.4 billion a year ago.
FORD ASIA-PACIFIC, AFRICA, MAZDA AND ASSOCIATED OPERATIONS
The 2004 second-quarter combined pre-tax profit for Ford Asia-Pacific, Africa, Mazda and Associated Operations was $55 million, compared with $17 million for the year-ago period, a year-over-year improvement of $38 million.
Ford Asia-Pacific and Africa: For the second quarter of 2004, Ford Asia-Pacific and Africa reported a combined pre-tax loss of $5 million, an improvement of $23 million from the same period a year ago. The improvement primarily reflected favorable exchange rates and stronger volume and mix, partially offset by higher costs and unfavorable net pricing. Sales rose to $1.9 billion, compared with $1.4 billion during the second quarter of 2003.
Mazda and Associated Operations: During the second quarter of 2004, Ford's share of Mazda and Associated Operations was a combined pre-tax profit of $60 million, compared with $45 million a year ago.
FORD CREDIT
Ford Motor Credit Company reported record net income of $897 million in the second quarter of 2004, up $496 million from $401 million 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. The increase in earnings primarily reflected continued improved credit loss performance, higher used vehicle prices and the favorable impact of the low interest rate environment.
HERTZ
Hertz reported a pre-tax profit of $144 million in the second quarter compared with a $57 million profit during the same period a year ago. The improvement primarily reflected higher rental car volume in leisure and commercial segments, higher profit from the disposal of used vehicles and equipment sales, and favorable cost performance. The improvements were partially offset by lower pricing in highly competitive car rental markets worldwide.
OUTLOOK
"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," said Chief Financial Officer Don Leclair. "Looking forward, we remain dedicated to achieving our financial milestones in this competitive marketplace and continuing to improve our balance sheet."
For the third quarter of 2004, Ford expects to earn in a range of breakeven to 5 cents per share from continuing operations, excluding special items.
Ford is increasing its full-year earnings guidance by 15 cents per share to a range of $1.80 to $1.90 per share from continuing operations, excluding special items. The increase primarily reflects the strong performance of the company's Financial Services sector. Special items, which are presently estimated to reduce full-year earnings by 8 cents per share, are expected to consist primarily of the restructuring and revaluation of our Ballard investment and completed European restructuring actions.
(July 20, 2004)
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