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Ford rides past forecasts
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July 19, 2000: 1:38 p.m. ET
Record revenue drives gains; parts spinoff, Europe charges bring net loss
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NEW YORK (CNNfn) - Ford Motor Co. posted higher second-quarter earnings from continuing operations Wednesday, beating Wall Street forecasts, although one-time charges led to a net loss.
The world's second-largest automaker earned $2.5 billion, or $2.07 a diluted share, excluding one-time charges as well as the results from its Visteon auto parts unit that was spun off at the end of the quarter.
 Analysts surveyed by earnings tracker First Call forecast Ford would earn $1.95 a share, excluding Visteon. The company reported earnings of $2.1 billion, or $1.77 a diluted share, a year earlier, excluding special items as well as the Visteon results.
Including Visteon's contribution as well as the charges for the Visteon spinoff and a $1 billion restructuring charge in Europe, the company posted a net loss of $577 million, or 47 cents a share, versus net income of $2.34 billion, or $1.89 a share, a year earlier.
Ford saw operating earnings in Europe drop about 25 percent, excluding the restructuring charges there. But analysts said that was still better than many expected, and that performance, along with better-than-expected gains in its finance arm, helped it to beat forecasts.
"They were pretty much as expected in North America," said David Healy, analyst with Burnham Securities. "Where they made gains was in better operating margins in Europe. Given that the market-share numbers in Europe are available and pretty unimpressive, it must be on the cost side."
Wendy Needham, analyst with Donaldson, Lufkin and Jenrette, said that Ford also did much better than expected in Asia. She said the results and restructuring efforts in Europe should put the company on the right track there, but it will be next year at the earliest for the change to be seen.
"As strong as their product is here in North America, they've had a lot of misses in Europe," she told CNNfn Wednesday. "Their cost structure isn't in line with their market share there. We're looking for a turn, but in the auto industry, restructuring always takes time."
 Healy said he wouldn't be surprised to see some analysts raise Ford estimates based on the results. But Henry Wallace, Ford's chief financial officer, told analysts that at this point the company is comfortable with estimates for the second half of the year. First Call's forecast is for the company to earn 95 cents a share in the third quarter and $1.45 a share in the fourth quarter without the contribution from Visteon.
"We feel pretty good overall on the second half," said Wallace. "We think it's going to be similar to second quarter in terms of what's going on in the industry."
In an interview later on CNNfn, Wallace said that the changes in product mix and production in Europe should help the company post stronger results going forward, although he said the gains wouldn't be seen immediately.
"We've had some problems in Europe for some time," he said. "The brand was weakening. We missed some of the products trends and of course we had a cost structure problem there. Right now we're halfway through revitalizing the product." (378 WAV) (378 AIFF)
Sales rose 6 percent to a record $44.5 billion from $41.9 billion. The company saw total vehicle sales rise to 1.99 million from 1.93 million a year earlier.
For the first six months of the year, net income came to $1.5 billion, or $1.22 a share, including all the special items and Visteon's contribution, compared with $4.3 billion, or $3.48 a share, in the year-ago period.
Year-to-date revenue rose to $87.4 billion from $79.5 billion a year earlier, as total vehicle sales increased to 3.9 million from 3.7 million a year earlier.
Ford (F: Research, Estimates) stock rose 3/4 to 47-11/16 in Wednesday trading. 
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Ford Motor Company
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