DETROIT – Ford Motor Co. (F) on Tuesday reported a 19 percent drop in second-quarter profit as it continued to lose vital U.S. market share, but earnings were substantially higher than analysts expected.
The second-largest U.S. automaker, which has warned that its automotive operations may not be profitable this year, reported a loss in the automotive business for the quarter, including a loss in North America, as its credit arm continued to drive results.
Ford's second-quarter net income fell to $946 million, or 47 cents a share, from $1.17 billion, or 57 cents a share, a year earlier.
Excluding special charges, earnings were also 47 cents a share. On that basis, Wall Street analysts on average were expecting second-quarter earnings of 33 cents a share, according to Reuters Estimates.
Shares of Ford rose 1.1 percent in pre-market trade.
Ford said charges related to a bailout of former parts subsidiary Visteon Corp. (VC) and job reduction programs reduced earnings per share by 18 cents. But the charges were fully offset by a one-time adjustment in the company's taxes.
"Despite profitability in most regions, our global automotive results were disappointing, reflecting the fiercely competitive environment in which we continue to operate, particularly in North America," Ford Chairman and Chief Executive said in a statement.
The lower earnings follow a 13-month decline in the company's U.S. vehicle sales, including a dramatic slowdown in sales of its profitable mid- and large-size sport utility vehicles amid high gasoline prices.
Ford and crosstown rival General Motors Corp. (GM) are also struggling with higher costs and a cut in their credit ratings to "junk" status this year.
Revenue of Dearborn, Michigan-based Ford rose to $44.54 billion in the second quarter from $42.87 billion a year ago.
Ford said its second quarter earnings included a pretax profit of $398 million in other automotive financial results, primarily reflecting interest income related to tax refunds.
Ford's auto operations posted a loss of $245 million before taxes and excluding charges, while its finance arm contributed net profit of $740 million.
Including special charges, Ford said its auto division posted a pretax loss of $571 million.
During the second quarter, Ford's key North American vehicle operations posted a loss of $1.21 billion before taxes and including special charges, compared with a pretax profit of $334 million a year ago. The company blamed lower sales and higher costs for the drop.
Ford's luxury brands, grouped under the Premier Automotive Group, narrowed its loss to $16 million before taxes and including special charges, compared with a pretax loss of $347 million in the year-ago period.
Ford, which last month had slashed its 2005 earnings outlook for the second time this year, affirmed its outlook for full-year earnings of $1 to $1.25 per share.
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