Ford's Q2 profit down 19%, confirms outlook

Ford Motor Company today reported a 19% drop in second-quarter earnings compared to the same time last year to $946m, while maintaining its outlook for 2005.

The profit of 47 cents a share for the number two US car maker was better than the consensus of analysts, who were expecting 33 cents a share in income. Revenues were also better than expected at $44.5 billion, up 3.7% from a year ago.

'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,' said chairman and CEO Bill Ford.

'We are responding to this tougher operating environment through actions aimed at improving our cost structure, optimising our global footprint, strengthening our balance sheet and making essential investments for the future. We'll continue to share our plans as the year progresses,' he added.

Ford has downgraded its outlook to reflect tougher conditions in the automotive business, but has avoided the financial meltdown at rival General Motors, which lost $1.1 billion in the first quarter.

Ford held to its $1-1.25 a share earnings outlook for 2005, not including the 21-30 cents a share charge it will take for restructuring its parts supplier Visteon Corporation.

With fuel prices soaring, Ford and other car makers have seen a dramatic shift away from their most profitable sports utility vehicle lineup. The Big Three are engaged in an employee-discount incentive war for precious market share after General Motors triggered an historic June with its 'You Pay What We Pay' programme.

Ford's North America division, facing higher costs and lower volume, reported a loss of $907m. The division reported a profit of $454m the same time a year ago. Net income at Ford Motor Credit fell to $740m from $897m in the second quarter of 2004. At Hertz Corporation, the rental unit to be spun off by Ford, profits rose by $9m to $153m.

Land Rover led a rebound in the Premier Auto Group, which includes the company's import nameplates, and posted a profit of $17m compared with a lost of $347m last year. Ford's financial unit, key to the company's profits in recent years, posted earnings of $740ms, down from $897m a year ago amid higher borrowing costs.