Ford Earns $2.7B Before Charges
Wednesday, July 19th 2000, 12:00 am
By: News On 6
DEARBORN, Mich. (AP) â€” Thanks to strong U.S. sales of new cars and trucks, Ford Motor Co. on Wednesday reported operating earnings of $2.7 billion in the second quarter, an 8 percent increase over the same period a year ago.
The company's actual earnings were hit by $3.3 billion in special charges from the spin-off of its Visteon parts unit and from cuts in its European business. Including one-time charges, Ford posted a loss of $577 million, or 47 cents per share.
The operating earnings translated to $2.20 a share, compared to operating earnings of $2.48 billion, or $2 per share, in the second quarter of 1999. Those results include earnings from Visteon.
The earnings are ahead of Wall Street estimates of $2.01 a share in operating earnings, according to a survey by First Call/Thomson Financial.
The world's second-largest automaker said $2.3 billion of the charges were due to the separation of Visteon Corp. in June. The charge comes from the difference in the value Ford assessed to the parts unit and the market value of Visteon stock.
The other $1 billion in charges after taxes is related to job cuts in England and Belarus and other European moves the company announced in May. Ford said it was ending vehicle production in Dagenham, England and cutting 1,400 jobs there.
Revenues totaled $44.5 billion, up 6 percent from $41.9 billion in the second quarter a year ago.
Once again, the majority of the company's earnings came from its North American car and truck business, which had operating earnings of $1.8 billion, a 7 percent increase from last year's total of $1.7 billion. The company has been able to keep sales of its highly profitable sport utility vehicles and pickup trucks up despite an overall slowdown in U.S. sales and high gas prices.
Ford has also benefitted from strong sales in some of its car models, notably the Ford Focus compact, the Taurus sedan, and good results at Jaguar and Volvo.
Elsewhere, the picture for Ford was not so rosy.
Before the one-time charge, Ford's European operations had operating earnings of $156 million, a 24 percent decline from year-ago results of $206 million. Ford has suffered from an aging lineup, high costs and fierce competition in Europe.
``With our plan in place to improve efficiency, reduce capacity and fixed costs, and accelerate our product offensive with 45 significant new products over the next five years, we are confident our European operations are driving toward sustained profitable growth,'' Ford CEO Jac Nasser said in a statement.
Ford's operating losses in South America decreased 46 percent, from $117 million a year ago to $63 million this quarter. Operations in Asia and elsewhere brought in $135 million, compared to a loss of $8 million a year ago.
Ford Credit earned $388 million in the second quarter, up 16 percent from last year's results. Ford's share of earnings at Hertz Corp. totaled $84 million.