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Ford posts record 1Q
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April 17, 2000: 7:53 a.m. ET
Strong sales at home and overseas cited as carmaker tops forecasts
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Ford Motor Co. posted record first-quarter profit Monday, driving past estimates.
The nation's second-largest automaker recorded net income of $2.1 billion, or $1.70 a share, in the quarter. Analysts surveyed by earnings tracker First Call forecast the company to make $1.58 a share in the period. Ford earned $1.8 billion, or $1.46 a share, before one-time items a year earlier.
 The results include a contribution from Visteon Automotive Systems, the auto parts division that Ford announced Friday it will spin off later this summer. Without that contribution, earnings were $1.9 billion, or $1.58 a share, compared with $1.6 billion, or $1.29 a share, a year earlier, before special items.
Henry Wallace, the company's chief financial officer, said Monday the company is comfortable with consensus earnings forecasts for the remainder of the year. First Call forecasts that Ford should make $2.00 a share in the second quarter, 95 cents a share in the third quarter when automakers traditionally change over to the new model year, and $1.53 a share in the fourth quarter. Those estimates all include a contribution from Visteon, however.
Revenue strong as Ford maintains pricing
Revenue rose to $42.9 billion from $37.5 billion a year earlier, excluding Visteon's sales. About 88 percent of the divisions' sales are to Ford itself, and the spin-off is seen as an effort to broaden its customer base. The division is expected to be spun off to shareholders in a tax-free transaction this summer.
General Motors Corp. (GM: Research, Estimates) last week announced that its vehicle prices were off 0.7 percent in the first quarter when accounting for the impact of incentives and marketing expenses. But Wallace said that while marketing costs increased slightly at Ford, the company did not see any increase in overall incentives during the period. Nicholas LoBaccaro, analyst with Lehman Brothers, said that Ford's net pricing increased 0.5 percent in the quarter.
Stocks tumble not expected to hurt vehicle sales
Neither Wallace nor LoBaccaro believe that a plunge in overall stock prices should hit U.S. car sales, even for luxury models, the remainder of the year.
"Clearly there is some issue of wealth effect, but as to what it really means, I don't know if any of us really know," said Wallace in response to repeated questions from reporters. "The fundamentals are still in place for strong performance in North America."
LoBaccaro said that car sales stayed strong during other recent market downturns, such as the decline in stock values during the Russian currency crisis of 1998.
"The stock market is not the big driver of vehicle sales," he said. "Employment is. Vehicle affordability is."
 Ford's North American vehicle sales rose to 1.3 million from the 1.2 million a year earlier, at the start of what turned out to be a record sales year. Sales outside North America rose to 602,000 from 554,000, but the company lost $115 million in Europe, South America and other overseas markets, about even with year earlier results. Wallace said the company still expects to be profitable this year in Europe. But although it expects to improve profitability in Latin America later this year, it will post a loss there, he said.
Shares of Ford (F: Research, Estimates) rebounded 3-15/16 Monday to 56-3/16, more than making up for the loss it saw in trading Friday. In addition to the Visteon announcement, the company announced plans Friday to offer shareholders $20 cash for a portion of each of their shares. Wallace told CNNfn that the company's offer of one share of Ford stock plus $20 or one share plus the equivalent of $20 in Ford stock is better than a simple stock buyback. (399K WAV or 399K AIFF) But two major ratings services, Standard & Poors and Moody's, downgraded the company's credit rating at that time, noting that those payments could reach $10 billion, along with Ford's recent announcement to acquire Land Rover for $2.9 billion. 
-- Click here to send e-mail to Chris Isidore
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