DETROIT -- Ford Motor Co., hurt by a steep loss in its North American automotive operations, on Tuesday reported a 19 percent drop in second-quarter profits.
The second-largest U.S. automaker also warned that it expected its global automotive business to post a loss this year and said it would give no more quarterly earnings forecasts, although it affirmed its full-year outlook.
Ford Chief Financial Officer Don Leclair said in a conference call that there was too much volatility in the market to make accurate near-term forecasts. Crosstown rival General Motors in April withdrew its forecasts for 2005 after posting a $1.1 billion loss in the first quarter.
Ford and GM have seen their margins squeezed by hypercompetition in the U.S. vehicle market and by this year's dramatic slowdown in sales of their profitable mid- and large-sized sport-utility vehicles amid high gasoline prices. They are also struggling with higher costs and a cut in their credit ratings to "junk" status this year.
In the second quarter, Ford's finance arm continued to carry results, while its auto operations posted a loss.
Shares of Ford see-sawed between positive and negative territory in Tuesday's trading even though the second-quarter earnings were substantially higher than analysts expected. Ford has beaten Wall Street consensus for 14 straight quarters.
Goldman Sachs analyst Robert Barry said the quality of earnings was poor.
"The better than anticipated result is due largely to tax and interest-related items rather than operational strength," Barry said in a note to clients.
The North American "operating performance was below our expectations and remains our primary concern," he said.
Deutsche Bank analyst Rod Lache said interest-related income boosted Ford's overall earnings per share by 20 cents.
"On a segment level, Ford clearly underperformed in their core auto business," he said in a note to clients.
Ford's second-quarter net income fell to $946 million, or 47 cents a share, from $1.17 billion, or 57 cents a share, a year earlier.
Ford said other automotive financial results, primarily interest income related to tax refunds, contributed $398 million to second quarter earnings.
Ford said charges related to a bailout of former parts subsidiary Visteon Corp. and job reduction programs reduced earnings per share by 18 cents. But the charges were fully offset by a one-time adjustment in the company's taxes.
Lower earnings at Ford follow a 13-month decline in the company's U.S. vehicle sales. Following the lead of GM, it recently launched a hefty discount program to win back market share and reduce inventories of unsold vehicles. The discounts appear to be boosting Ford's sales for July, Leclair said.
He also said Ford is working to accelerate cost cuts and suggested that the automaker is also looking at ways to reduce excess production capacity.
Revenue of Dearborn, Michigan-based Ford rose to $44.54 billion in the second quarter from $42.87 billion a year ago.
Ford's auto operations posted a loss of $245 million before taxes and excluding charges, while its finance arm contributed a net profit of $740 million.
During the second quarter, Ford's key North American vehicle operations posted a loss of $1.21 billion before taxes and including special charges, compared with a pretax profit of $334 million a year ago. The company blamed lower sales and higher costs for the drop.