DETROIT -- Ford Motor Co. on Tuesday raised its second-quarter earnings outlook, citing a tax refund, but it also warned that its finance arm may post a significant drop in future profits.
The second-largest U.S. automaker said it now expects second-quarter earnings to range from break-even to 15 cents a share excluding items, up from its previous estimate of a loss of 15 cents per share to break-even.
"We are getting a tax refund sooner than we thought," Ford spokesman Glenn Ray said. "We expected it in the fourth quarter. It will occur now in the second quarter."
Ford said its full-year outlook of $1.25 to $1.50 earnings per share remained unchanged.
In a filing with U.S. regulators, Ford also said last week's cut of its debt to "junk" status by the Standard & Poor's ratings agency would increase its borrowing costs and restrict access to unsecured debt markets.
To mitigate the impact, Ford Credit plans to increase its use of securitization and other asset-related sources of liquidity, the company said.
It warned, however, that over time a reduction in its purchase of receivables -- or the loans Ford Credit underwrites for car dealers -- could "significantly hurt Ford Credit's profits and adversely affect its ability to support the sale of Ford vehicles."
Ford Credit has long been a leading contributor to the automaker's profits.
Ford Credit earned $710 million in the first quarter, up $22 million from a year ago. Ford's auto division posted a pretax profit of $473 million, including charges.
Overall, Ford posted a 38 percent drop in first-quarter earnings, pressured by falling U.S. sales and rising costs. Net earnings fell to $1.21 billion during the quarter from $1.95 billion a year ago.
