DEARBORN, Mich. (AP) – Ford Motor Co. swung to a $1.2 billion loss in the first quarter as it began a costly restructuring effort amid weak U.S. sales, leaving Ford executives disappointed but determined to go ahead with their plan to cut 30,000 jobs and remake the No. 2 automaker.

“This transformation isn’t going to be quick and it isn’t going to be painless,” Ford Chairman and Chief Executive Bill Ford said in a statement. “It involves risks and the financial rewards won’t be immediate. But in the end, I believe we’ll get there.”

Investors weren’t so sure. Ford’s stock fell 63 cents, or nearly 8 percent, to close at $7.32 on the New York Stock Exchange, approaching its 52-week low of $7.13.

The loss of 64 cents per share for the January-March period compares with a profit of $1.2 billion, or 60 cents per share, a year earlier. Sales fell 9 percent to $41.1 billion from $45.1 billion a year ago. It was Ford’s worst quarterly performance since the fourth quarter of 2001, when the company posted a $5.07 billion loss due to $4.1 billion in costs for a previous restructuring plan.

The Dearborn-based automaker’s results were in stark contrast to its bigger crosstown rival General Motors Corp., which reported record quarterly revenues and a smaller loss for the quarter on Thursday. GM lost $323 million for the quarter versus a loss of $1.3 billion the previous year. GM has begun its own North American restructuring after losing $10.6 billion last year.

Analysts said the difference was Ford’s weaker mix of vehicles. While GM was raking in profits from its new lineup of sport utility vehicles, Ford was heavily dependent on mid-size cars with lower margins, Goldman Sachs analyst Robert Barry said. Ford’s SUV sales plummeted in the first quarter, with sales of the Ford Explorer down 25 percent. The company’s overall U.S. sales fell 3 percent for the January-March period.

Ford said it spent more on incentives and had a higher number of low-margin lease and fleet sales than the year before. The automaker also suffered losses at the 23 former Visteon Corp. facilities it took over last fall as part of a deal to avert bankruptcy at the auto supplier, its former parts division.

Despite those headwinds, Ford in January launched its Way Forward restructuring plan, which calls for cutting 30,000 jobs and closing 14 facilities by 2012. Ford’s first-quarter results included a pretax charge of $1.7 billion, or 61 cents per share, for costs associated with the plan, including buyouts and pay for laid-off hourly workers whose plants have been idled.

Excluding one-time items such as restructuring charges, Ford said it earned $458 million, or 24 cents per share. That was one penny a share below Wall Street’s expectations, according to analysts surveyed by Thomson Financial.

Ford should start reaping the benefits of its restructuring efforts in future quarters. A deal with the United Auto Workers that makes retirees pay more for their health care is expected to take effect this summer, for example. But Ford Americas President Mark Fields wouldn’t be specific about when the company will see those gains or will resume providing financial guidance.

“Our path is not going to be linear or smooth. It’s still early days,” Fields said.

That left some analysts pessimistic.

“We believe implementation has been slow and it could be some time before benefits are realized,” Merrill Lynch analyst John Murphy said in a note to investors.

Ford’s North American automotive unit, which has been struggling with declining sales and high fixed costs, reported a pretax loss of $2.9 billion for the first quarter, down from a $557 million profit the previous year. Excluding one-time items, the division lost $457 million, compared with a $644 million profit in 2005.

Worldwide, Ford’s automotive operations lost $2.7 billion versus a profit of $473 million last year. Excluding one-time items, worldwide operations lost $184 million in contrast to a $580 million profit last year. Ford sold 1.7 million vehicles worldwide in the first quarter, up 3 percent from a year ago despite the decline in the U.S.

Ford Motor Credit Co. earned $479 million for the quarter, down 33 percent from $710 million a year ago. The division said it faced higher borrowing costs due to Ford’s credit rating, which fell below investment grade last year.

Bill Ford said the company was encouraged because every division outside North America was profitable in the first quarter. A bright spot was the Premier Automotive Group, Ford’s luxury division and a perennial drag on earnings, where strong sales at Land Rover helped swing the unit to a $163 million profit from a $55 million loss a year ago.

Bill Ford and Fields said the results won’t sway their product plans, including the introduction of the redesigned Ford Expedition and Lincoln Navigator SUVs this summer. Fields said that while SUV sales have been down, Ford believes its products can compete even with record-high oil prices.

“We’ve seen the gas prices spike up, but as we’ve seen last year, that’s very volatile,” Fields said.

Ford also defended a zero-percent financing offer on its hybrid SUVs, saying it expects to set a sales record for those vehicles in April. Bill Ford said the company will continue to push hybrids and ethanol even in the difficult financial climate.

“Oil is a dear resource and is not going to get any less dear as we go into the future,” he said.

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AP-ES-04-21-06 1753EDT

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