DEARBORN, Mich. - Ford Motor Co. on Thursday reported a larger net loss for the fourth quarter, as the cost of job cuts in Europe and a restructuring of its spinoff deal with former parts arm Visteon Corp. offset improved finance and automotive results.
But Ford reported a full-year net profit for the first time since 2000, and operating earnings for the year and the quarter topped Ford's own forecasts. Ford Chairman and Chief Executive Bill Ford Jr. has repeatedly said he prefers the company to "underpromise and overdeliver" on its turnaround plan aimed at producing $7 billion in annual pretax profit by later this decade.
While Ford has set a target of at least maintaining its global market share this year by launching 40 new models, Ford executives say the cost of those launches and weak pricing in Europe and the United States will pressure its earnings.
"We continue to believe that Ford is in a tough spot between (General Motors) and the Japanese, limiting earnings growth potential, but it is undeniable that the company's execution is improving," said Merrill Lynch analyst John Casesa in a research note.
Ford's shares have traded near an 18-month high in recent weeks, along with those of General Motors as investors grew more optimistic about an economic recovery and improved profits at the automakers.
Both GM and Ford have promised investors better results from their automotive businesses this year after relying on their finance arms to produce much of their profits in 2003. GM on Tuesday posted a better than expected quarterly profit on record earnings from its finance operations.
MAKING THE NUMBERS
Ford said it lost $793 million, or 43 cents a share, in the quarter, compared with a net loss of $130 million, or 7 cents a share, in the same period a year ago. Excluding some $2 billion in charges from Europe and Visteon, Ford said it earned 31 cents a share, compared with earnings of 11 cents a share in the fourth quarter of 2002.
For all of 2003, Ford said net earnings totaled $495 million, or 27 cents a share. Excluding special items, Ford said it earned $1.14 per share. The operating results were higher than Ford's previous forecast to Wall Street of full-year earnings of $1.05 to $1.10 per share.
Ford, which may have been passed by Toyota Motor Corp. as the world's second-largest automaker in 2003, said full-year revenue increased about 1 percent to $164.2 billion, even as vehicle sales fell about 4 percent to 6.7 million.
Ford's market share in the United States fell by 0.6 percentage point to 20.5 percent in 2003, as competitors launched new vehicles and the company killed off unprofitable models such as the Ford Escort.
Ford's automotive unit had a pretax loss of $4 million in the fourth quarter, compared with a $240 million pretax loss a year ago. While the carmaking business increased its operating profit, an increase in interest expenses due to a change in accounting rules weighed on the results.
Financing arm Ford Credit reported net income of $470 million, a 33 percent increase from the same period a year ago.
Ford's North American auto business saw its pretax profit fall 62 percent in the fourth quarter, despite higher revenue and vehicle sales, due to higher costs from new vehicles, pensions and health care.
Ford Europe, where Ford has launched a plan to cut 6,700 jobs in a bid to reduce losses, reported a pretax profit of $60 million, its only profitable quarter of 2003. The Premier Automotive Group of luxury brands had a pretax profit of $108 million compared with a loss of $388 million in the same period a year ago.
The automaker forecast first-quarter earnings of 40 cents to 45 cents a share, excluding special charges, and maintained its previous outlook for earnings of $1.20 to $1.30 per share for all of 2004. Analysts on average were expecting 34 cents a share in the first quarter, according to Reuters Research, a division of Reuters Group Plc.