Struggling Ford Motor Co. stunned analysts Thursday with a surprise second-quarter profit of 750 million dollars, aided by improvement in global operations and the divestment of its Aston Martin brand.
Even accounting for special factors, the results were far better than the forecasts of Wall Street analysts, most of whom expected the second-largest US automaker to remain in the red after a record 12.7 billion-dollar loss in 2006.
Ford executives nonetheless warned of further losses this year and said much work remained in reducing costs and improving competitiveness.
“We are not ready to claim victory,” Ford president and chief executive Alan Mulally said in a conference call with analysts.
“We will incur substantial losses in both the third and fourth quarters, primarily in North America,” he said. “We remain committed to our plan and the improvements we are seeing this year will help us meet our 2009 profitability target.”
Ford's results were boosted by strong demand for its new product lines which reduced the need for costly incentive programs and improved overall revenue, Mulally said.
Market share in the critical US market is stabilizing while both sales and profits grew significantly in Europe, Latin America and Asia, he added.
There is a “greater than 50” percent chance that Ford will sell its Jaguar and Land Rover nameplates, Mullaly said, though he declined to comment on speculation that Ford could raise anywhere from 1.5 billion to 6.5 billion dollars from the sale.
“We are now moving to the next stage of more detailed discussions with all the people who've expressed interest,” he added. “We haven't put a specific time frame on it but … we're very encouraged by the response we're getting.”
Ford also acknowledged it is conducting “a strategic review of Volvo that likely will conclude prior to year-end.”
Further cost savings could come out of contract negotiations this summer with the automaker's main union, the United Auto Workers.
“We are looking at every element of our competitiveness going forward,” Mulally said. “The neatest thing about working closely with the UAW over the last few months is everybody really does understand the position we're in.”
The second-quarter results show Ford swung to profit after a loss of 317 million dollars in the same period a year ago and a 282-million-dollar loss in the first quarter of 2007.
Excluding special items including the Aston Martin sale, Ford still had a global profit of 13 cents a share, an astonishing result in view of the Wall Street consensus view for a loss of 31 cents per share.
Ford's second-quarter revenue was 44.2 billion dollars, up from 41.9 billion a year ago, with a weak dollar and higher pricing offsetting lower volume car sales.
The surprising results offered a glimmer of hope to a company and sector that has been mired in losses and with bleak prospects.
Ford said its cost-savings program trimmed 600 million dollars from expenses in the second quarter and 1.1 billion in the first six months of the year.
Globally, automotive operations accounted for a profit of 378 million dollars in the second quarter. But North America still had a loss of 279 million, down from 789 million in the same period a year ago.
Ford said it got a lift from its new Edge sport utility vehicle, which has become the top seller in its segment.
The overall profit included 443 million realized from the sale of Aston Martin, the British sportscar maker.
