Thursday, January 20, 2005

Ford profits jump to $3.5 billion

Automaker records a 7-fold increase in spite of falling market share and growing costs

By Eric Mayne / The Detroit News

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DEARBORN - Ford Motor Co. reported a full-year 2004 net income of $3.5 billion, seven times its 2003 total, despite a challenging environment that included declining market share and and skyrocketing costs for health care and steel.

But Ford's performance was less due to car and truck sales than record results by its financing arm. Ford Motor Credit Company's net income totaled $2.9 billion for the year, up $1.1 billion from 2003.

"We also confronted operating challenges with our Jaguar brand and high industry marketing costs," said Bill Ford, chairman and chief executive officer.

For the fourth quarter, the company reported a net income of $104 million - reflecting a $600 million charge to reduce the value of a receivable owed to the automaker by its former captive supplier, Visteon Corp.

The receivable relates to costs for which Visteon reimburses Ford for post-retirement health care benefits and life insurance provided to Ford employees assigned to Visteon and other select Visteon employees, the automaker said.

Ford also inched closer to its full-year pre-tax profit goal of $7 billion by generating $5.8 billion in 2004. As part of its revitalization plan announced in 2002, Ford pledged to hit the $7 billion mark by 2006.

"Despite the increasingly tough conditions in the global market, we continued to make progress in building on the basics," said Don Leclair, executive vice president and chief financial officer.

"We are pleased with the growing acceptance of our new products, as well as the record earnings of our financial services sector."

Jim Padilla, chief operating officer, deflected criticism that Ford is too reliant on Ford Motor Credit Company. "Ford Credit bucks are worth as much as automotive bucks," he told attendees of the Automotive World Congress late Tuesday.

Ford's worldwide automotive operations earned a pre-tax profit of $850 million in 2004, up from $153 million a year ago.

Padilla, who has been tapped to succeed retiring president Nick Scheele effective Feb. 1, added he's "damn proud" of the financial arm's performance, saying it's are reflection of vehicle sales.

General Motors Corp.'s financing arm, GMAC, earned a record $2.9 billion in 2004, up from $2.8 billion in 2003. But GMAC also handles mortgages.

Ford's net income for 2004 translates to earnings of $1.73 per share, up from 2003's full-year earnings per share of 27 cents.

Worldwide, Ford vehicle sales totaled 6.8 million units, an increase of 62,000 over 2003. But fourth-quarter sales slipped 133,000 to 1.8 million.

Other highlights included a $1.2 turnaround by Ford of Europe, which recorded a full-year pre-tax profit of $114 million - up from 2003's full-year loss of $1.1 billion. In contrast to its performance in North America, Ford also increased market share in Europe, Asia Pacific and South America.

But Ford's Europe-based Premier Automotive Group slumped badly, a result influenced by the weakening U.S. dollar and a poor performance by Jaguar. For 2004, PAG reported a pre-tax loss of $740 million - down from 2003's pre-tax profit of $171 million.

You can reach Eric Mayne at (313) 222-2443 or emayne@detnews.com.