DETROIT – Buoyed again by record profits at its lending business, Ford Motor Co. met analysts’ expectations in the fourth quarter and posted full-year net profits that were seven times higher than the modest gain booked in 2003.
Ford reported a net profit of almost $3.5 billion, or $1.73 per share, for the year, up from $495 million, or 27 cents a share, earned in 2003. Before that, Ford had lost $6.4 billion over two years.
The automaker would have earned almost $4 billion if not for a $600 million pretax charge it took to acknowledge the likelihood that Visteon Corp. will default on payments to cover retirement benefits for UAW members under contract with Ford but on lease to Visteon. After taxes, the charge is worth $399 million.
But investors and analysts are skeptical that it can keep improving.
One reason is that its primary money-maker – Ford Credit – appears to have finally reached its maximum potential, earning a record $2.9 billion – 61 percent more than the $1.8 billion it earned in 2003. The unit also benefited from unrepeatable gains, such as a $500 million decrease to the amount set aside to cover bad loans.
“We’re not going to continue at that level” seen in 2004, Cosper said. But he still anticipates that 2005 will be a “strong year.”
Elsewhere in Ford’s nonautomotive operations, car-rental agency Hertz Corp. nearly doubled its full-year profit to $493 million before taxes.
In automotive operations, Ford earned $1.5 billion before taxes last year in the core North American market, an 18 percent drop from 2003’s pretax profits.
In the United States, all three of Ford’s traditional domestic brands lost market share, as the automaker pursues greater profits per vehicle, even if it means selling fewer cars and trucks.
In the fourth quarter, when it cut production, Ford lost $470 million in North America, before taxes, down from a profit of $205 million in the same three months of 2003.
Comments are no longer available on this story