Ford Motor Co. (F), after reducing its full-year profit outlook for the second time in two months late Tuesday, said on Wednesday it was cutting another 1,700 salaried positions.
Shares of Ford were down 48 cents, or 4.3 percent, at $10.68, in afternoon trading on the New York Stock Exchange (search), up from an earlier low of $10.64.
The nation's No. 2 automaker said it now expects to earn $1 to $1.25 per share, 25 cents lower than its previous forecast issued in April, when the company lowered its original guidance of $1.75 to $1.95 per share.
The company said Tuesday that the profit outlook for its North American operations has weakened over the last two months, and added that "continued supplier-related challenges" also will affect results.
The latest earnings warning follows a 12-month decline in Ford's U.S. vehicle sales and comes as Detroit's automakers, led by struggling General Motors Corp. (GM), are trying to tackle some of their biggest challenges in decades, including mushrooming health-care and raw material costs, and increased competition from Asian automakers.
Ford also said it was taking new steps to reduce costs related to salaried employees this year. The company will cut salaried positions at its North American operations by 5 percent, or about 1,700, and reduce the use of agency and purchased services by 10 percent. The new cuts come atop 1,000 salaried job cuts also announced in April.
Ford also will eliminate bonuses this year for salaried management employees, and suspend the matching company portion in its 401(k) plans for salaried employees effective July 1.
The announcement prompted ratings agency Standard & Poor's (search) to warn that Ford's debt rating, which it last month lowered to non-investment grade status, or "junk," could be cut further.
"We believe there is now an increased likelihood that the ratings ... will ultimately be downgraded further," S&P said in a statement Wednesday.
Ford did raise its second-quarter earnings guidance before special items to a range of 30 cents to 35 cents a share, up from previous estimates of break-even to a loss of 15 cents a share.
Analysts appear to have viewed Ford's earlier full-year forecast for earnings of $1.25 to $1.50 per share as too optimistic, based on the average estimate of $1.16 per share carried in a survey by Thomson Financial. The average estimate for the second-quarter is 13 cents a share.
Ford earned $1.2 billion in the first quarter, but the company has said it's bracing for tougher times ahead because of lower vehicle production, rising health care expenses, decreased demand for some of its profitable trucks and SUVs and other factors.
The company's bonds also weakened against Treasuries. The spread or extra yield on Ford bonds with a 7 percent coupon due in 2013 widened by 0.33 percentage points to 3.71 percentage points after the warning late Tuesday, according to MarketAxess.
Earlier this month, Ford said its Hertz Corp. (search) car rental unit filed with the U.S. Securities and Exchange Commission for an initial public offering. Following the IPO, Ford said it plans to divest its remaining ownership in Hertz. In April, Leclair said Ford was considering selling Hertz, which it's owned since 1994, in an effort to focus on its core automotive business.
Reuters and the Associated Press contributed to this report.
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