Downturn batters GM, Ford profits

A shaky quarter
(Results in millions of dollars)
  3D QTR 2001 3D QTR 2000
GM    
Revenue $42,475 42,690
Profit (loss) (368) 829
Ford    
Revenue $36,552 40,055
Profit (loss) (692) 994
Note: Net income reflects one-time charges.
Source: Company reports

DETROIT - General Motors put distance between itself and archrival Ford Motor Co. in the third quarter by posting net income of $385 million - excluding special charges - compared with Ford's loss of $502 million, also excluding charges.

The trend seems likely to continue. Ford CFO Martin Inglis predicted another loss in the fourth quarter, while GM Vice Chairman John Devine said the company still expects to be profitable "despite a weakening market."

In core automotive operations, GM reported earnings of $212 million, while Ford lost slightly more than $1 billion.

But with three quarters behind them, both companies appear ready to post sharp declines for the full year compared with their red-hot 2000 financials.

Meanwhile, analysts anticipate a 21 percent drop in profits for DaimlerChrysler AG when it reports third-quarter results on Oct. 23, according to the First Call investment service.

54% profit drop

GM's adjusted net income represented a 54 percent decline from the $829 million it posted for the third quarter of 2000. Revenue dipped to $42.5 billion from $42.7 billion a year earlier.

Including $753 million in special charges, though, GM posted a net loss of $368 million for the quarter. Charges included $194 million to close the Ste. Therese, Quebec, assembly plant and $474 million that GM paid to Raytheon Corp. to settle a dispute over Raytheon's 1997 merger with Hughes Defense.

Looking ahead, Devine said GM expects to produce 1.27 million units in the fourth quarter, a dip of 7 percent from earlier projections. But, he said, continued cuts in auto-rental fleets might threaten that plan.

Ford sales down

Ford posted a third-quarter loss of $692 million on revenue of $36.6 billion, compared with a profit of $994 million on sales of $40.1 billion a year earlier. It had one-time charges totaling $190 million in the just-ended quarter.

Both companies took big hits in their bread-and-butter North American operations, although GM remained in the black with a profit of $641 million, down 41 percent from a year earlier. Ford recorded a loss of $849 million compared with a $782 million profit a year earlier.

The two continue to bleed red ink on European operations, although Ford showed improvement in the quarter.

GM lost $287 million in Europe in the third quarter, a result Devine termed "more disappointing than we'd like to see." He said Adam Opel AG's "Olympia" restructuring program and introduction of the new Opel Vectra should help European results.

Ford slashed its European loss to $24 million from $221 million in the third quarter of 2000. The company said several new vehicles, including the Mondeo, Transit and Maverick, helped boost profitability in Europe.

You can reach Dave Guilford at dguilford@crain.com

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