NEW YORK -- Ford Motor Co. said on Wednesday it earned $896 million in the first quarter, well above analysts' estimates, as cost cuts and better earnings from its finance arm helped offset lower sales.
While warning that the economic outlook was still uncertain, the world's second-largest automaker also stuck to its full-year earnings forecast of 70 cents a share, or about $1.2 billion.
By comparison, General Motors warned on Tuesday it might not meet its 2003 earnings target because of incentive costs and the wobbly U.S. economy.
Some analysts had already assumed Ford would outperform its estimates after credit rating agency Standard & Poor's affirmed its stance on Ford last week, saying the automaker was on track with its cost-cutting and its goal of break-even pretax earnings in its automotive unit.
But the first quarter result was an upbeat surprise nonetheless.
David Healy of Burnham Securities said Ford's first quarter results were likely to erase some of the skepticism about the automaker's turnaround.
CEO Bill Ford has sped up cost-cutting efforts to hit the targets he laid out in a turnaround plan, even as the U.S. market faltered in recent months. Ford said it cut $638 million in costs from its automotive business in the first quarter, more than its target of $500 million for all of 2003.
While Ford's vehicle sales were down slightly, its revenues rose 3.5 percent to $40.9 billion. Thanks to its system for managing incentive costs, Ford's net pricing in the United States rose 0.2 percent. GM, which has been more aggressive with incentives, saw its prices fall 3 percent.
Ford Credit, Ford's financing arm, earned $442 million in the first quarter, a 72 percent increase from the same period a year ago.
The company stuck to its plans for a 17 percent cut in its North American vehicle production for the second quarter over the same period a year ago. Its U.S. inventories of unsold vehicles at the end of March were about 25 percent higher than a year ago on a selling-rate basis, and Ford has been forced to follow GM's lead with a new wave of interest-free loans this month.
Ford's forecast earnings of 10 cents a share for the second quarter, below analysts' consensus forecast of 13 cents a share. Wall Street's consensus for all of 2003 is 44 cents a share, as many analysts have called Ford's earnings targets too optimistic. By mid-decade, the turnaround plan calls for Ford to earn $7 billion a year before taxes.
Ford's stock plunged in mid-March to decade lows after the company released its second-quarter production estimate, and its bond yields have soared in recent months on worries of a credit rating downgrade.