The No. 2 U.S.-based automaker also said its latest round of early retirement and buyout offers netted 4,200 hourly workers, fewer than Ford had targeted.
It was the company's first profitable quarter since the second quarter of 2007, when it earned $750 million. Ford reported a full-year loss of $2.7 billion last year, and cautioned that the rest of this year will be tough.
"The remainder of 2008 will be a challenge but we are cautiously optimistic despite the external challenges," CEO Alan Mulally said in a statement. "Our plan is working."
Ford also lowered its industrywide U.S. vehicle sales forecast for the full year to a range of 15.3 million to 15.6 million. In January it had expected full-year sales of 16 million.
Ford says it earned 5 cents per share in the January-March period. The Dearborn-based automaker lost $282 million, or 15 cents a share, in the same period last year.
Excluding special items, the company said it earned $525 million after taxes, or 20 cents per share. That beat Wall Street's expectations. Analysts surveyed by Thomson Financial had predicted a loss of 16 cents per share.
Ford's shares rose 43 cents, or 5.8 percent, to $7.95 in morning trading.
Despite the profit, Ford said it will lose money in 2008, but Mulally said the company is on track to return to profitability in 2009 as planned despite worse-than-expected U.S. economic conditions.
"The underlying business is improving," Mulally said.
Ford still plans to spend $12 billion to $14 billion per year through 2009 to cover losses and pay for restructuring costs.
Mulally said there will be further production and hourly employee cuts this year.
Chief Financial Officer Don Leclair said second-quarter North American production will be 710,000 vehicles, down 101,000 from the same period last year. The 710,000 figure is 20,000 less than the company's guidance from the previous quarter and includes a 40,000 cut in trucks, partially offset by increased car production, Leclair said.
The profit came despite a $45 million pretax loss in Ford's core North American automotive market. That was an improvement over a $613 million loss in the year-ago quarter, driven by $1.2 billion in cost reductions that helped buffer a U.S. sales decline.
Company spokesman Mark Truby said Ford may offer additional buyout and early retirement packages on a plant-by-plant basis to further reduce its blue-collar work force.
Ford reported first-quarter revenue of $39.4 billion, down from $43 billion a year ago due to the sale of its Jaguar-Land Rover and Aston Martin units. Excluding the sale, revenue would have been up slightly, the company said.
Special items for the quarter totaled $416 million, including worker buyout and early retirement costs and the cost of reducing its dealer ranks.
Ford said it earned $257 million pretax in South America, up from $113 million a year ago. In Europe, it made $739 million, compared with $219 million in the first quarter of last year.
Volvo had a pretax loss of $151 million, compared with a profit of $94 million a year ago. It was the first quarter the company broke out earnings for the Volvo unit.