Ford Confounds Wall Street, Turns $750m Q2 Profit

30 July 2007

DEARBORN, Michigan: After posting a series of results that made earthquakes seem like Jello tremors, Ford Motor Company delivered yet another shock to the denizens of Wall Street: a whopping $750 million (€549.57m; £369.64m) second quarter profit.

The automaker's unexpected coup lifted its year-to-date earnings to $468m (22 cents a share), against almost universal expectations of a massive loss. Indeed the company itself had predicted a full-year operating loss of nearly $3 billion.

But on Friday it lifted its guidance for 2007 with cfo Don Leclair cautiously advising that the company is on course to post "better" results than the $2.8 billion operating loss reported last year.

The welcome shock is partially due to Ford's recent sale of the Aston Martin brand, acquired from its British owner in 1991. According to Leclair it is "probable" that the other two other UK-manufactured brands within its Premier Automotive Group, Land Rover and Jaguar, will also be sold.

Adds ceo Alan Mulally: "We've invested very carefully in PAG over the years, but our focus clearly has to be on Ford and the Ford brand globally.

"We are cautious about the externals such as the subprime market, consumers, gas prices. As you know, this is an up-and-down industry, and the third quarter is usually one of our lumpiest. We are still in a loss position in North America."

There is also concern in Dearborn's boardroom at the overall US economy, on which Ford executives [and the rest of the globe] is keeping a wary eye. Leclair said the company will cut production if pressures in the broader economy cause the automotive market to glissade.

He also warned that cost-cutting savings will slow as commodity and regulatory costs rise in coming months and capital expenditures increase.

Data sourced from Wall Street Journal Online. additional content by WARC staff