DETROIT Ford Motor Co. profits rose in the third quarter, but the automotive operations are on a money-losing streak that will continue in the fourth quarter.
Ford reported net income of $266 million in the third quarter on revenue of $39 billion, up from a $25 million net loss a year ago. Fords booming financial services business, with pretax profits of $1.43 billion, offset pretax automotive losses of $673 million.
Ford said last week that it remains on track for total automotive pretax profits of around $1 billion for 2004, excluding special items. That means another automotive loss in the fourth quarter. With the help of a robust first quarter, the automotive unit already has posted $1.29 billion in 2004 pretax profits, excluding special items, through September.
Vehicle launch costs and lower production volumes are major contributors to the second-half slide.
North America produced the bulk of the third-quarter automotive loss. The regions $481 million pretax loss, excluding special items, was worse than expected by industry analysts.
The decrease in profitability reflects unfavorable exchange and lower volume, partially offset by better mix, Ford CFO Don Leclair said.
North America is still on track for pretax automotive profits of $1.5 billion to $1.7 billion for full-year 2004, excluding special items, Leclair said. Through the first nine months of the year, it had posted $1.94 billion in pretax profits, excluding special items.
Ford of Europe posted better-than-expected results with a pretax loss of $33 million. The Premier Automotive Group, with its troubled Jaguar business, continued its decline with a pretax loss of $171 million, excluding special items. PAG is expected to break even in the fourth quarter, Leclair said.
Third-quarter special items included a $23 million charge for restructuring at Jaguar and a $41 million charge for revaluing Fords investment in Ballard Power Systems. Ford also took a $312 million charge for exiting Formula One racing. Ford said it expects Jaguar restructuring to produce a $75 million charge in the fourth quarter and another $75 million charge in 2005.
Ford increased its full-year earnings guidance last week. The company now expects 2004 earnings of $2 to $2.05 per share from continuing operations, excluding special items.
Those special items, primarily charges on the Ballard reinvestment and the restructuring at Jaguar and Ford of Europe, are expected to reduce earnings by 13 cents per share.