U.S. Sales Drive Ford Earnings

Strong U.S. sales and continued cost-cutting helped Ford Motor Co. push its fourth-quarter operating earnings up 8 percent over last year.

The world's No. 2 automaker said it earned $1.8 billion, or $1.47 a share, compared to operating earnings of $1.67 billion, or $1.35 a share, in the final three months of 1998. The 1998 results do not include a charge of $631 million, or 51 cents a share, for employee reduction programs.

The results beat Wall Street expectations by two cents a share.

Revenues for the quarter totaled $44 billion, an increase of 17 percent over $38 billion in 1998.

For all of 1999, Ford said it earned $7.2 billion, or $5.86 per share, up 22 percent over operating earnings of $5.9 billion, or $4.72 a share, in 1998. Ford also earned an additional $16 billion in 1998 on the spin-off of The Associates finance unit. The increase came in part from the addition of Volvo, which Ford bought in 1999, as well as a $1 billion reduction in costs.

"Ford had an outstanding year in 1999 by most measures and we achieved industry-record earnings," said Ford President and CEO Jac Nasser.

Much of Ford's fourth-quarter profit came from it's North American business, where the company continued to enjoy healthy sales of its profitable sport utility vehicles. Ford earned $1.4 billion on its worldwide automotive business in the quarter, roughly equal to last year's operating profit for the quarter before the employee reduction charge. Revenues were up 19 percent, from $32 billion to $38 billion.

North American operations earned $1.6 billion in the quarter, on revenues of $27 billion. That's up 14 percent over last year's operating profit of $1.4 billion on revenues of $24 billion. The results from 1999 include $103 million in lump-sum payments under new contracts with the United Auto Workers and Canadian Auto Workers.

In Europe, Ford lost $55 million in the fourth quarter of 1999, compared to 1998 quarterly earnings of $63 million before one-time charges. In South America, Ford lost $95 million, compared to a loss of $75 million in the final three months of 1998. Earnings in other markets around the world totaled $23 million, compared to a loss of $2 million in the same period of 1998.

For the year, Ford earned $5.7 billion on its automotive operations, with a healthy North American business making up for a $452 million loss in South America.

"In North America, our momentum is very strong and our results in the region show the fundamental strength of our brands when the products are right and the costs are right," Nasser said. "Our results in Europe and South America are unacceptable, but we are making product investments that will deliver more hits...At the same time, we are rigorously addressing costs.