The Ford Motor Co. said Monday that a healthy U.S. economy and strong sales of trucks boosted its third-quarter earnings to $1.1 billion, up 10 percent over last year.
The world's No. 2 automaker earned 90 cents a share for the three months ending in September, compared with $1 billion, or 80 cents a share, for the same period of 1998.
Sales totaled $38 billion, up 16 percent from $32.6 billion a year ago.
The results beat Wall Street analysts' expectations of 85 cents a share, according to a survey of 13 analysts by First Call/Thomson Corp.
Ford's earnings were reduced $125 million by a one-time profit reduction related to higher costs for retiree healthcare and life insurance at Ford's parts division, Visteon Automotive Systems.
It was the 14th straight quarter of improved earnings for Ford, which has enjoyed a record-setting year for car and truck sales. The company also reached a contract agreement with the United Auto Workers earlier this month without a costly work stoppage.
"We continued our strong earnings momentum, despite very competitive markets worldwide, by building our brands, leveraging the synergies offered by our global scale and maintaining a rigorous cost discipline," said Ford president and CEO Jac Nasser.
Earnings in Ford's automotive operations totaled $690 million, a gain of 7 percent over $646 million last year. Revenue from auto operations was up 18 percent, from $26.5 billion to $31.3 billion.
Profits in North America and cost-cutting offset Ford losses in Europe and South America. The company said it had cut costs $300 million in the quarter, and had squeezed out $700 million in cost cuts so far this year.
In North America, Ford earned $1 billion, up 12 percent from the third quarter of 1998. Ford said a firm job market and low borrowing costs contributed to strong sales; through September, Ford's U.S. light vehicle sales were up 5 percent, excluding Jaguar and Volvo.
In Europe, the company lost $171 million, compared with a loss of $273 million last year. Ford said lower sales of its Mondeo and Fiesta cars were partially offset by cost cuts, improvements in Jaguar sales and the addition of Volvo AB, which Ford bought last year. Ford said it did not expect to improve its earnings in Europe over last year.
Losses increased in South America to $72 million, from $44 million last year. A weak economy in Brazil and work stoppages there hurt earnings, the company said.
For the first nine months of 1999, Ford earned a record $5.4 billion, or $4.39 a share. The company's previous record was $4.9 billion in the first nine months of 1998, excluding a gain of $16 billion from the sale of Associates First Capital, a finance company.
The company said its automotive cash was also a record $25.7 billion, up from $22.9 billion a year ago. Minus outstanding debt, the company had $12.9 billion, down from $13.1 billion last year. Ford said spending on acquisitions was offset by a strong cash low.
Ford's other divisions reported higher profits. Visteon earned $155 million, including the adjustment for retiree benefits, a gain of $7 million, or 5 percent, over a year ago. Ford is considering a spin-off or sale of Visteon, and said the division had won $1.7 billion in new contracts so far this year, and that 36 percent was from customers other than Ford.
Ford Credit earned $317 million, up 16 percent or $45 million from a year ago. The company said higher costs due to employee separation programs were offset by more financing. Ford's Hertz rental-car unit earned a record $139 million, up 17 percent from $119 a year ago.
By Justin Hyde