DEARBORN – Ford Motor Co. reported a 41 percent drop in its first-quarter earnings on Thursday, as the slowing U.S. economy dragged on profits at the world's second-largest automaker.
Ford, which has seen its prestige and market share hurt by last year's public scrutiny over deaths and injuries in rollovers of its popular Explorer sport utility vehicle, said earnings dropped to $1.13 billion, or 60 cents per share in the first quarter compared with earnings of $1.92 billion, or 90 cents per share, in the previous first quarter.
Despite the downturn, the results came in at the high end of Wall Street estimates. Industry analysts had been expecting earnings in the range of 45 cents to 62 cents, with a consensus forecast of 54 cents, according to Thomson Financial/First Call.
Ford was the second major Detroit automaker to report a weak but better-than-expected performance in the first quarter after General Motors Corp. said on Wednesday that its first-quarter earnings fell 88 percent.
Ford's revenues slumped to $42.4 billion compared with $42.9 billion in the same quarter a year ago. Earnings from its core North American operations fell to $754 million, meanwhile, from $1.67 billion in the first quarter last year.
Ford's U.S. vehicle sales fell 16 percent in the first quarter, reflecting the economic slowdown and flagging consumer confidence. A 5 percent cut in vehicle production at Ford, aimed at trimming inventories of unsold cars and light trucks, also weighed on profits since automakers automatically book sales when they ship vehicles from factories to dealerships.
The first-quarter results excluded a negative impact of $72 million or 4 cents per share from the adoption of new accounting rules for derivatives.
Ford's shares have strongly outperformed those of its cross-town rival GM, the world's No. 1 automaker, so far this year. They rose more than 19 percent in the first quarter, while GM's edged up less than 2 percent.
With Wednesday's close at $30.71 per share on the New York Stock Exchange, up a strong 6.3 percent on the day after the Federal Reserve's latest interest rate cut, Ford's is hovering near its 52-week high of $32.71. And it has erased the steep loss it suffered in the aftermath of last summer's Bridgestone/Firestone (5108.T) recall of 6.5 million tires.
Lawsuits, Delayed Suv Launch
Deadly blowouts and tread separations in 15-inch Firestone ATX, ATX II and Wilderness AT tires, many of which were fitted as standard equipment on Ford vehicles led by the Explorer, have been linked by federal regulators to more than 170 deaths and about 500 injuries in the United States.
Ford said the tire recall cost it $500 million last year, evenly divided between the third and fourth quarters. But it has declined to reveal how much it set aside to settle lawsuits stemming from accidents involving the Explorer, or other vehicles fitted with the recalled tires.
Auto industry analysts have said delays in the launch of Ford's all-new 2002-model Explorer and Mercury Mountaineer SUVs, which are wider and more stable than their predecessors, weighed on its potential earnings in the first quarter.
But Ford said the launch, marred by a recall last week to correct a possible design problem with the vehicles' rear window, was deliberately slowed in a bid to detect any embarrassing problems or quality issues before the SUVs went on sale.
Ford's U.S. market share was down 1.4 percent in the first quarter over the same period a year ago, a slip that analysts attributed at least in part to growing competition in the highly profitable light truck and SUV sector.
``I think the eroding market share is a sign of being a Big 3 automobile manufacturer that has enjoyed an oligopoly in light trucks which is now going away,'' said Gary Lapidus, an auto analyst at Goldman Sachs in New York.
``The market share declines are somewhat inevitable,'' he added.
Ford's key automotive operations in Europe, where it launched a restructuring program last year, rose to a profit of $88 million in the first quarter from a year earlier loss of $3 million.
Losses from South American auto operations were $53 million, meanwhile, from a loss of $82 million. The Asia-Pacific region and other global markets reported a loss of $41 million versus $30 million a year earlier.
Ford's finance unit Ford Credit contributed earnings of $406 million, up from $353 million a year ago.
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